M.A.

ECONOMICS
SEMESTER - III

AGRICULTURAL
DEVELOPMENT AND POLICY

SUBJECT CODE : 99470

 © UNIVERSITY OF MUMBAI
Prof. Suhas Pednekar
Vice Chancellor
University of Mumbai, Mumbai.
Prof. Ravindra D. Kulkarni Prof. Prakash Mahanwar
Pro Vice-Chancellor, Director
University of Mumbai. IDOL, University of Mumbai.

Programe Co-ordinator : Ms. Rajashri Pandit

Asst. Prof-Cum Asst.-Director , IDOL
University of Mumbai , Mumbai – 400098.

Course Co-ordinator : Dr. Gopal Eknath Ghumatkar

Assistant Professor of Economics, IDOL,
University of Mumbai, Mumbai – 400 098.
Edited by : Dr. Pratiksha Narayan Tikar
Assistant Professor of Economics, IDOL,
University of Mumbai, Mumbai – 400 098.

Course Writers : Shivani Mathur

Balbharati College of Commerce,
Swamy Vivekanada Rd. Ghanshyam Nagar, Jethava Nagar,
Kandivali West, Mumbai – 67.
: Rekha Pankaj Mishra
Ghanshyamdas Saraf College of Arts and Commerce College,
Malad (W), Mumbai – 400064.

November 2021, Print I

Published by
Director
Institute of Distance and Open Learning, University of Mumbai,Vidyanagari, Mumbai - 400 098.

DTP COMPOSED AND PRINTED BY

Mumbai University Press,
Vidyanagari, Santacruz (E), Mumbai - 400098.
 CONTENTS
Unit No. Title Page No

Module I
1. Role of Agriculture 1
2. Theories of Agricultural Development 9

Module II
3. Sustainable Agricultural Development And Food Security-I 32
4. Sustainable Agricultural Development And Food Security-II 53
Module III
5. Competitiveness of Agricultural Products And Marketing – I 90
6. Competitiveness of Agricultural Product And Marketing – II 110

Module IV
7. History & Policies for Agricultural Development In India – I 128
8. History & Policies for Agricultural Development In India – II 141

*****
 Syllabus
M.A. Economics, Semester - III
Agricultural Development And Policy

Number of Credits: 6
Pattern of Evaluation: Standard

Preamble: This course aims to enhance the students understanding of agricultural development.
Starting from basic questions like what factors leads to agricultural development or why does the share
of agriculture in GDP godown on once economies start developing, the course tries to enhance the
students awareness on contemporary debates in the literature, and leads them to analysis of current
governmental policies and strategies for surviving in the globalizing world. Questions to be asked for the
post 1980 period.

Module1: Theories of Agricultural Development: (12 Hours)

Role of agriculture in a developing economy vis-a-vis a development economy; Theories of agricultural
development (Lewis, Schultz, Mellor, Hayarni and Ruttan)

Module 2: Sustainable Agricultural Development and Food Security: (12 Hours)

Impact of green revolution; Models of spread of technology and experiences in input use efficiency;
Measurement and strategies for sustainable development; Food security, Concept, measurement,
magnitude, and critical evaluation of government policies.

Module 3: Competitiveness of Agriculture Products and Marketing: (12 Hours)

Measurement of efficiency of agricultural products in international markets; Efficiency of agricultural
markets in India; Form and impact of government intervention in the markets and its effects on efficiency;
Commodity markets: operation and likely impacts; Strategies for surviving in a globalizing world.

Module 4: History and Policies for Agricultural Development in India: (12 Hours)
Trends in production since1950; National Food Policy; Agriculture Polciy; Area, productivity,
Employment and wage rate analysis; Trends in India’s agricultural exports and imports and implications.

References:

Essential Readings

1. BasuKarnhik, Analytical Development Economics, Oxford University Press, 1998 (Modulel).

2. Bhalla G S., Globalization and. Indian Agriculture, Volume 19 of the State of the Indian Farmer
Series. Academic Foundation, 2004 (Module3)

3. Dreze Jean an::l.AmartyaSen, Hunger and Public Action, Oxford University Press, 1989
(Module2)
4. lewis Arthur, Ecommic Developrrent with Unlimited supply of labour, Manchester School of
Economics and Social Studies 22: 139-91, 1954 (Module1)

5. Mellor and Muddahar M, in Agriculture in Economic Development: Theories, findings and

Challenges in Asian context in A Survey of Agricultural Economics Literature, Edited by
LeeMartin. University of Minnesota Press, 1992 (Module1)

6. NortonGeorge and Jeffery AlWang, Introduction to Economics of Agricultural Development,

McGraw Hills, New York, 1993 (Module1)

7. Sawant SD (2002), Indian Agriculture: Past developments and policies for the future Dantwala
Monograph.

*****
 MODULE I

1
ROLE OF AGRICULTURE
Unit Structure
1.0 Objectives
1.1 Introduction
1.2 Role of Agriculture in developing country
1.3 Role of Agriculture in developed country
1.4 Summary
1.5 Questions

1.0 OBJECTIVES
 To know the role of agriculture in developing country
 To know the role of agriculture in developed country

1.1 INTRODUCTION
In the economic growth of any nation agriculture plays a very important
role. Agriculture has made an immense contribution the economic growth
of the developed nations and its role in the underdeveloped or developing
nations is equally important. Nearly 75% of the Indian population is
depending on agriculture for its livelihood thus making it the largest
source of economic activity for the entire nation. Although with rapid
development in the technology leading to a substantial growth in the
secondary and tertiary sectors, agriculture still remains a very important
source of occupation.

1.2 ROLE OF AGRICULTURE IN DEVELOPING

ECONOMY
In developing and the underdeveloped nations agriculture has always and
is still playing very crucial role in their economic development and
employment generation. In our following discussion we will have a look at
the detailed role of agriculture in its contribution to the economic growth
of such underdeveloped or developing nations.

1. Product Contribution:
Majority of the underdeveloped or developing nations depend on their
own agricultural activity for food grains and pluses for their own self
consumption. However, as exceptions do exist there are a few nations like
Malaysia and Saudi Arabia who exports their natural resources like oil and
gas which in turn helps them earn foreign exchange in huge volumes, and
1
this huge amount of foreign exchange which they earn helps them import Role of Agriculture
their entire food requirements for their population. These countries being
exceptions, all the other developing nations don‟t earn or don‟t have such
a huge reserve of foreign exchange from which they can import the entire
food requirement of the population of their entire country, and hence they
have to rely on their own agriculture to produce enough quantity of food
grains to feed their entire population.
In developing or underdeveloped nations, the farmers have to produce
food grains well above their survival requirements as they have to supply
necessary quantity of food grains to their urban population. Farmers in the
developing nations should have marketable surplus of food grains which
will help meet the food requirements of population employed as workforce
in both secondary as well as the tertiary sectors which is ultimately
necessary for the growth of both these sectors. With the growth of
secondary and the tertiary sectors, it is equally important that the
agricultural sector also grows at such a rate which matches the food grain
requirement of the increasing workforce and helps in sustaining both the
growth of secondary as well as the tertiary sector.
The agricultural growth has to match the industrial development because if
there is a shortfall in the agricultural production then the food grains
import is not possible due to the shortage of foreign exchange reserves.
This is turn will adversely affect industrial or the secondary sector as the
terms of trade will turn against the secondary or the industrial sector and
this will ultimately halt the growth process, as the industrial production
will no longer be profitable. This will ultimately result in the economy
coming to a grinding halt.

2. Factor Contribution:
Nearly 60% of the population of the developing countries is engaged in
the agriculture, so agriculture can supply a huge quantity of workforce to
the secondary and tertiary sectors provided if proper training is given to
such a workforce employed in the agricultural sector. This can only
happen when the productivity in industrial or tertiary sector rises. In
Lewis‟s “Model Of Development With Unlimited Supplies Of Labour”
surplus labour mobilization which is disguisedly unemployed in the
agricultural sector is necessary for the growth and expansion of the
industrial or secondary sector and capital accumulation is necessary for
generating employment in the expanding industries. Lower wage rate for
workers implies lower will be the cost of production for the industrial or
secondary sector which in turn will generate huge profits for the
industrialists, who can reinvest these profits for further industrial
development and capital accumulation.
In countries like India, where there is a democratic set up and everyone
has a right to choose their own occupation, the labour employed in the
agricultural sector cannot be forced to migrate to the industrial sector until
and unless there is an increase in the agricultural productivity and hence
there is a marketable surplus of food grains. Green Revolution of mid

2
Agricultural Development 1960s played a crucial role in revolutionizing the use of technology in the
and Policy agricultural sector and leading to a marketable surplus generation in the
agricultural sector. This led to a growth in the industrial sector of many
developing countries of South-East Asia using cheap labour so freed from
the agricultural sector.

3. Source of Capital:
Agriculture can be a key source capital formation for the industrial growth
in the developing nations. In many poor developing nations, the
agricultural income is unequally distributed, so people living in the rural
areas and having high income can invest their savings in the industrial
development.
Land revenue generated from agriculture forms an insignificant source of
State income in India. A committee led by late Dr K. N. Raj suggested
„Agricultural Holding Tax‟ to transfer savings from agricultural sector for
economic development.

4. Market Contribution:
reflected in the demand for the industrial products. In the initial stages of
development, when the urban sector is not very well developed or very
small and export market is still a distant dream, agriculture sector in the
underdeveloped nations is a major market for industrial products. The
farmers spend their money income on industrial goods which they earn by
selling their production of cash crops like sugar, jute, cotton, etc. Income
generated by the farmers by selling their marketable surplus of food grains
is also used in creating the demand for the industrial goods.
For the industrial growth to be high, the demand for industrial products
has to expand or increase. It has been observed in India, that whenever
there is a slow or a negative growth in the agricultural sector, there has
been no growth in the industrial sector due to deficiency of demand for the
industrial products. When there is an increase in the agricultural
productivity and production leads to an increase in the demand for
industrial goods and services and this leads to an acceleration in the rate of
economic development. According to World Development Report of the
year 1979, “a stagnant rural economy with low purchasing power holds
back industrial growth in many developing countries.”
There is a direct relationship between agriculture and the industries,
agriculture creates a demand for the various industrial products and in turn
supplies food and raw materials to the industries, raw materials include
items like sugarcane, jute, cotton, oilseeds etc. Agriculture also provides
raw materials to the agro-based industries like sugar manufacturing, rice-
husking, oil-crushing, handloom weaving, etc. Hence, when the
agricultural growth is slow or sluggish, these agro-based industries will
not be able to get regular and required supply of their raw-materials.
From the above discussion it is clear that a rapid and a healthy growth in
the agricultural sector is a prerequisite for a rapid industrial growth. This

3
has an impact on the pricing of the agricultural products in relation to the Role of Agriculture
industrial goods, that is this decides the terms of trade between agriculture
and the industry. Lower agricultural prices imply cheaper raw materials
and food for the industry which in turn leads to lower cost and which
ultimately leads to higher profitability. From the agriculture point of view
lower prices means lower income for farmers, which in turn would impact
their purchasing power to buy industrial goods.
As lower agricultural prices would only discourage the agricultural
productivity. So for balancing of the terms of trade between the
agricultural sector and the industrial sector, the agricultural prices should
neither be to high to make industrial production an unprofitable bargain,
nor should they be so low that leads to the exploitation of the agricultural
sector and farmers are not encouraged to increase their agricultural
productivity.

5. Foreign Exchange Contribution:

In initial stages of economic development with low industrial
development, exports of agricultural products can be the main source of
foreign exchange earnings for an underdeveloped country, agriculture
earns foreign exchange from its exports of primary goods.
In the initial stages of economic development, the developing countries
face a major crisis of foreign exchange or what is often referred to a
„foreign exchange gap‟ to meet their requirements of imports of industrial
goods for their industrial development. Agriculture by exporting primary
goods contributes to the foreign exchange earnings thereby enabling the
developing nations to be able to import the industrial goods needed for
their industrial growth, these are the goods which cannot be produced in
the importing country or even if produced will be produced at a higher
opportunity cost.
So here we can see that agriculture can play an important role in
contributing to the economic development of the nation by earning foreign
exchange needed to import the industrial raw materials and capital goods
needed for industrial expansion. The shortage or lack of foreign exchange
acts as a big hindrance for the growth process of a developing nation. In
India‟s Second and Third Five Year Plan the agricultural sector was
relatively ignored in allocation of investment resources, so the growth
process too came to a halt as even the basic food requirements were
needed to be imported with lack of enough foreign exchange balance, the
balance of payments problems were being experienced and it increasingly
became more difficult to import even necessary inputs for the industrial
growth.

6. Agriculture and Poverty Alleviation:

In India, majority of the poor population lives in the rural areas of the
country. Still around 40% of the Indian rural population lives below
poverty line, even after 60 years of independence, and majority of them
are marginal farmers, Scheduled Castes and Tribes, landless agricultural
4
Agricultural Development labourers. Among others, Montek Singh Ahluwalia the former Deputy
and Policy Chairman of Indian Planning Commission that agricultural growth leads to
a decline in the poverty. Agricultural growth plays an important role in
any strategy framed to eradicate poverty. Agricultural growth helps in
increasing both the productivity as well as the income levels of small and
marginal farmers and improves the employment level as well as the wage
level of the agricultural workers. In this way, it helps in both the poverty
as well as the disguised unemployment. An increase in the agricultural
productivity ensures lower food prices and thus, helps in keeping inflation
under control and thus contributes in lowering of the poverty level.

7. Contribution of Agriculture to Employment Generation:

In key growth models for labour-surplus developing nations, eminent
among them are „Lewis‟ model of growth with unlimited supply of
labour,‟ Mahalanobis growth model of assigning higher importance to
basic and heavy industries highlighted the point of withdrawal of surplus
labour from the agricultural sector to be employed in the growing or
expanding industrial sector. However, it was observed that instead of
withdrawing of surplus labour from agriculture, the modern industries
were highly capital intensive and generated very little or limited
employment opportunities which were not even able to employ the openly
unemployed workforce in the urban areas.
Agricultural growth provides a good employment potential, however to
generate this employment potential from agricultural growth it is
necessary that a proper strategy of agricultural growth is followed. The use
of new agricultural technology like High Yield Value Seeds, pesticides,
fertilizers accompanied by optimum quantity of water for irrigation
purposes will help in increasing the level of agricultural employment.
Adaptation of inputs like high-yielding technology helps the farmers to
adopt multiple cropping which in turn leads to a large employment
potential generation in the agricultural sector.
In order to improve and expand the irrigation facilities and other
agricultural infrastructural needs so that the farmers across India can draw
benefits from the new high-yielding technology, there is need to increase
in the capital investment in the agricultural sector. The extensive
dispersion of the high-yielding technology in the rural areas of India will
not only raise the agricultural productivity but will also raise the
employment level in the agricultural sector. In order to achieve full
employment potential agricultural growth, mechanisation in agriculture
should be used in a selective manner so that there is no reckless
substitution of manpower by machines leading to an increase in the
unemployment level. Further to increase the employment level in the
agricultural sector, land reforms like tenancy reforms and distribution of
land through imposition of ceiling on land holdings should be effectively
be implemented as small farmers employ more labour, have higher
cropping intensity and higher productivity.

5
1.3 ROLE OF AGRICULTURE IN A DEVELOPED Role of Agriculture

ECONOMY
Agriculture sector has always played a tactical role in the economic
development of any country. It has made an important contribution to the
economic well-being of advanced countries.
If we have a look at the history, we find that there is a clear evidence that
Agricultural Revolution led to the Industrial Revolution there. Similarly,
in U.S. and Japan also we see that the agricultural development aided in a
huge way in the process of industrialization.
Over the years it has been witnessed that an increased agricultural
productivity and output contributes to the overall economic development
of the nation in a big way. So it will be more logical and correct to give
greater importance to the further development of the agricultural sector.
According to all leading economists like Prof. Kinderberger, Todaro,
Lewis, Nurkse etc. agriculture contributes to the economic development in
several ways, viz
1. As it not only provides food for the entire population but also
provides raw material to the non-agricultural sectors of the economy.
2. It creates a demand for non-agricultural sectors in the rural areas, as it
increases the purchasing power of the rural population which happens
when they sell their marketable surplus.

1.3.1 Role of Agriculture in A Developed Countries:

1. Contribution to National Income:
If we have a look at the economic history of many advanced and
developed countries, we find that the agricultural prosperity has
immensely contributed in encouraging economic progress. It has been
rightly said that today‟s well developed and industrialized economies were
once mainly agricultural economies, and today‟s underdeveloped
economies are primarily agricultural countries, and agriculture contributes
a major chunk of income to their national income.

2. Source of Food Supply:

Even though, agriculture may not be the prime source of income for the
developed nations, it is of significant importance to the developed nations
as well, because if there is any shortfall in the agricultural production and
it fails to meet the ever-increasing food demand, then it will adversely
affect the growth rate of even the developed economies. So increasing the
agricultural output has been of prime importance for the economic growth
of any nation, whether it‟s a developed nation or a developing one.

6
Agricultural Development 3. Pre-Requisite for Raw Material:
and Policy
A steady growth and advancement in the agricultural sector is a must for
any economy irrespective of the fact whether it‟s a developing or a
developed economy. As far as the developing economies are concerned
agricultural sector forms a substantial part of their national income, the
importance of agricultural sector is no less in developed countries either,
as it provides raw materials to the industries which in turn converts them
into finished products. Say, for example flour mills converts wheat into
flour which is ultimately supplied to bread manufacturers who
manufacture bread from the same flour. There are many such examples
where industries take their raw materials from agriculture products and
later manufacture them into finished goods for final consumption.

4. Shift of Manpower:
When the economy is a developing economy, agriculture absorbs large
amount of workforce. However, it is important for the economy that there
is a progress in the agricultural sector through automation, which will
force the workforce to shift from agricultural sector to non-agricultural
sectors which will ultimately lead to economic development. This will
help in reducing the burden of the workforce on land which is always
limited in supply. Once the economy turns into a developed economy, the
percentage of labour employed by agriculture will be very low mainly due
to the fact that the advanced technology has replaced the huge labour force
from the agricultural sector. Which ultimately leads to high productivity
and limited employment of labour in the agricultural sector.

5. Helpful in Phasing out Economic Depression:

In times like economic depression when the industrial production hits the
rock bottom and survival for any economy whether developed or
underdeveloped becomes really difficult, it is at this time agriculture plays
a vital role in not only the production of necessities of the society but more
importantly providing employment to the people and thus creating demand
for other goods and services.

1.3.2 Conclusion:
Progress in the agricultural sector is essential as it provides for the ever-
growing non-agricultural population of the nation. Agricultural progress is
further necessary as it provides raw materials to many industries which in
turn helps the nation in earning foreign exchange and in generating
employment in the nation.

Check Progress:
1. What is the role of agriculture in Developing country?
2. What is the role of agriculture in developed country?

7
1.4 SUMMARY Role of Agriculture

Agriculture‟s role in the developed countries if we see is mainly limited to

maintaining a regular food supply for its population, providing raw
materials to the industries which depend on agriculture for regular supply
of their raw material these are mainly agro-based industries. Another
important role agriculture plays in the developed countries is during
depression as it helps revive the economy when all the industrial
production is down.
However, if we talk about the role of agriculture in developing countries,
it plays really a very vital role, be it creating job opportunities nearly 50%
of the population in such countries are still employed in the agriculture.
Besides this agriculture still contributes to economic development as it
supplies raw material to various agro-based industries which still form the
backbone of the economy in such countries. Agriculture still forms a
major part of the national income of the developing nations and even
supports them in earning foreign exchange in their initial years of
development.

1.5 QUESTIONS
1. What is role of agriculture in developing and developed countries.

*****

8
 2
THEORIES OF AGRICULTURAL
DEVELOPMENT
Unit Structure
2.0 Objectives
2.1 Introduction
2.2 Lewis Model
2.3 Theories of Agricultural Development: Schultz Theory
2.4 Mellor‟s theory of agriculture development
2.5 Ruttan & Hayami‟s theory of agriculture development
2.6 Summary
2.7 Questions

2.0 OBJECTIVES
 To know the different theories of agriculture development given by
different economist and agriculturist.
 The objective of this unit is to provide knowledge about the various
theories of agricultural development which are applicable to
underdeveloped countries.

2.1 INTRODUCTION

This unit deals with the various theories of agricultural development. The
important theories discussed in this unit are Lewis theory, Schultz theory.
These theories discuss the problems of labour surplus economy. Lewis
theory in particular assumes that the underdeveloped countries have
surplus labour in the sense that marginal productivity of labour is zero. He
calls for transferring of labour from agricultural sector to industrial for
economic development. The unit also contains theories which suggest the
ways and means of transforming traditional agriculture. The theories of
agricultural development are propounded by Mellor, Ruttan and Hayami.

2.2 LEWIS MODEL

2.2.1 Introduction:
The Lewis model tries to study the structural reformation of an economy
in a survival stage to a modern industrial economy through the process of
surplus labour. The theory was developed by Nobel laureate W. Arthur
Lewis in 1954. For the underdeveloped or developing nations Lewis
Model became the general theory of development process in labour
surplus.
9
2.2.2 Assumptions: Theories Of Agricultural
Development
1. The model assumes an underdeveloped economy has a surplus of
unproductive labour in the agricultural sector.

2. The labour is attracted to the growing manufacturing sector which

offers higher wages.

3. It assumes that the wages in the manufacturing sector are more or less
fixed, or stable.

4. Manufacturers make profit as they charge a price above the fixed

wage rate.

5. The model assumes that the profit earned by charging a price above
the fixed wage rate will be reinvested in the business in form of fixed
capital.

6. A well developed and an advanced manufacturing sector indicates

that the economy has changed from a traditional economy to an
industrialized one.

W. A. Lewis divided the economy of a developing country into 2 sectors:

2.2.3 The capitalist Sector:

Lewis has defined the capitalist sector as “that part of the economy which
uses reproducible capital and pays capitalists thereof” the capitalist sector
get reward in form of profit for the risk undertaken by them for investing
their capital. The capitalist controls the use of capital who use the services
of labour and pay them wages. Capitalist sector includes activities like
manufacturing, trading, plantations etc. The capitalist sector may be
private or public, by private we mean when the capital is invested by
private individuals, firms or companies whereas when we say public, we
refer to capital invested by the government.

2.2.4 The subsistence Sector:

According to Lewis, survival sector is that sector or part of the economy
which don‟t use reproducible capital. It can also be referred to as the
indigenous or traditional or “self-employed sector”. The per head output in
the subsistence sector is comparatively lower as compared to the capitalist
sector as it is not able to generate its own ideas with capital. The “Dual
Sector Model” is development theory in which surplus labour from
traditional (agricultural) sector migrates to the modern industrial sector
whose growth rate absorbs the excess labour, encourages industrialization
and accelerates sustained development.
In this model, low wages, abundance of labour and low productivity
through a labour-intensive production process are the characteristics of the
subsistence agricultural sector. As against this, capitalist manufacturing
10
Agricultural Development sector is defined by higher wage rates as compared to subsistence
and Policy agricultural sector, higher marginal productivity, and a higher demand for
workers. It is assumed that the capitalist sector will use a capital-intensive
production process, so investment and capital formation and investment in
manufacturing sector are possible over a period of time as capitalist‟s
profits are reinvested in the capital. Here, hypothetical developing
economy‟s investment is moving towards the physical capital stock in the
manufacturing sector and improvement in the marginal productivity of
labour in the agricultural sector is assumed to be of low priority.

2.2.5 Relationship between the two sectors:

The primary relationship between the two sectors can be established from
the fact that as the capitalist sector expands it uses labour from the
subsistence sector. This increases the output per head of the workers who
move from the subsistence sector to capitalist sector. Lewis in his model
considers overpopulated labour surplus economies and also assumes that
the supply of unskilled labour to the capitalist sector is unlimited. This in
turn leads to a situation where new industries can be established and
existing ones can be expanded at the existing wage rate. A huge part of
the unlimited supply of labour consists of the labour force who are in
disguised unemployment in agriculture and other occupations like
domestic services, casual jobs, petty retail trading etc. Lewis also takes
into account factors that cause an increase in the supply of the unskilled
labour they are women in the household and population growth.
The amount of cultivable land for agricultural sector is limited, so the
marginal productivity of an additional farmer is assumed to be zero. As
per the law of diminishing marginal returns has run its course due to the
fixed input, land. So, the agricultural sector has huge number of farmers
who are not contributing to the agricultural output since their marginal
productivity is zero. This group of farmers that are not producing any
agricultural output are termed as surplus labour as this group of labour can
be shifted to another sector without adversely affecting the agricultural
output. So mainly due a difference in the wages of the capitalist and
subsistence sector, the labour will tend to migrate from the agricultural
sector to the manufacturing sector over a period of time to get higher
wages. Even though the marginal productivity of the labour is zero, it will
still share the total product and will receive wage equal to average
productivity.
The general welfare and productivity will improve if the quantity of
workers moves from subsistence to capitalist sector which is equal to the
surplus labour in the subsistence sector, regardless of the fact who actually
transfers. With the transfer of labour from subsistence sector to
manufacturing sector the total agricultural production will remain the
same while the total industrial production will increase due to addition of
labour, however; this additional labour will bring down the marginal
productivity and wages in the manufacturing sector. As the transition of
labour continues to take place and investment results in an increase in the
capital stock, the marginal productivity of labour in manufacturing sector

11
will continue to rise due to capital formation and will fall by additional Theories Of Agricultural
workers entering the manufacturing sector. Over a period of time the wage Development
rates for both the manufacturing as well as the agricultural sector will be
equal as the workers leaving agricultural sector for manufacturing sector,
increasing the marginal productivity and wages in agricultural sector while
lowering the productivity and wages in the manufacturing sector.
The end result of the migration process of the labour from the agricultural
sector to the manufacturing sector is that the agricultural wages will
ultimately be equal to the manufacturing wages and similarly, agricultural
marginal productivity of labour will also be equal to the manufacturing
marginal productivity of labour. After this point, there will be no further
enlargement or expansion of manufacturing sector as the workers no
longer have any monetary incentive for transition. Lewis model we can
explain with the help of diagram.

2.2.6 Surplus labour and the growth of the economy:

The Lewis model of development of a two –sector economy can be

illustrated as follows:

In the figure, the quantity of labour is ensured along the horizontal axis
and real wage is measured along the vertical axis. OA is the average rural
income and OW is the urban quantity of labour industrial wage rate.

It assumed that OW is at least 30% higher than OA. D1D1, D2D2 and D3D3
are the demand curve for labour in the industrial sector. SL is the supply
curve of labour to the modern industrial sector. According to Lewis, there
is surplus labour in the traditional sector, in the sense that marginal
productivity of labour is zero and rural read wage is determined by the
average product.

12
Agricultural Development Initially the demand curve for labour in the modern sector is D1D1which is
and Policy
also the marginal product curve of labour. The modern profit-maximizing
sector, initially hires OL1, i.e. to point were their marginal product is equal
to real wage. In figure, demand curve for labour D1D1intersects the labour
supply curve at point E, corresponding to which the total modern sector
employment is equal to OL1. The total output of modern Sector would be
given by the OD1EL1. The total wage bill would be OWEL1. The total
profits of the capitalist would be equal to the area WD1E. The capitalist
would reinvest the entire profits. The reinvestment of profits by the
capitalists would increase the total stock of capital and this would shift the
demand curve for labour to D2D2. A new equilibrium will be achieved at
point F will OL2 workers employed. As a result, the total output rises to
OD2FL2. The total wages and profits increase to OWFL2 and WD2F
respectively. The capitalist will reinvest the entire profits which further
increases the stock of capital and shifts the labour demand curve to D3D3.
The result is that there is further increase in employment and income in
modern industrial sector. The new equilibrium takes place at point G at
which the level of employment is OL3 and total income is OD3GL3. The
wages and profits increase to OWGL3 and WD3G. The reinvestment of
this profit by the capitalist leads to further expansion of output and
employment and promote development of a dual economy.

The above process of growth of modern industrial sector and employment

expansion will continue until all surplus labour from the traditional sector
is absorbed in the industrial sector. After the exhaustion of surplus labour,
additional workers can be withdrawn from the agricultural sector only at a
higher wage rate. The supply curve of labour will become positively
sloped and wages and employment in modern sector will go hand in hand.
The structural transformation of the economy will have taken place by this
time.

2.2.7 Criticism of the Lewis model:

Although the Lewis theory is very interesting as it has explained the

process of development of a labour surplus economy in a simple and
attractive way, the theory suffers from certain drawbacks.
1. Labour saving capital accumulation: The theory assumes that the
capitalists will reinvest their profits which head to expansion of output
and employment in the modern sector. But if the capitalist reinvests
their profits in more sophisticated laboursaving capital equipment or
technology, it would not lead to expansion of employment. This kind
of reinvestment of profits will lead to rise in only output and
capitalists‟ profits. If this is the case, the whole theory breaks down.

13
2. Urban wage rate not constant: The theory assumes that wage rate in Theories Of Agricultural
urban industrial sector is constant until the supply of labour is Development

exhausted from the subsistence sector. This is unrealistic as urban

wage continues to rise due to pressure from powerful workers union.

3. Capital Flight: The theory assumed that the capitalist would reinvest
their profits within the domestic economy. So, the theory argued that
the reinvestment of profits would lead to expansion of output and
employment. But if the capitalists tend their profits abroad as a form
of capital flight then the expansion of output and employment will not
take place in the domestic economy.

4. Skilled Labour not a Temporary Bottleneck: Lewis assumes that

unskilled labour can be given training and skill can be formed. So, he
considered skilled labour as temporary bottleneck. However, skill
formation poses as serious problem and it takes a long time and high
cost to train the unskilled workers.

5. Marginal productivity of labour not zero: The theory assumes that

marginal productivity of labour is zero in subsistence sector of
overpopulated underdeveloped countries.

2.2.8 Conclusions:
Despite these criticisms, the Lewis theory is extremely valuable as an
early conceptual portrayal of the development process through the transfer
of surplus labour from the subsistence sector to modern industrial sector. It
has explained the process of structural transformation of labour surplus
underdeveloped countries in a very clear and simple manner. It explains
how capital accumulation can take place in such an economy with
reinvestment of profits by capitalists which help in growth of the economy
and expansion of employment and output. But the theory needs certain
modifications in assumptions and analysis to fit the reality.

Check Progress:

1. What are you understand by capitalist sector and subsistence Sector in

agriculture development?

2. What is the relationship between capitalist and subsistence sector?

3. Critically evaluate the Lewis theory of agriculture development.

14
Agricultural Development 2.3 THEORY OF AGRICULURAL DEVELOPMENT:
and Policy
SCHULTZ THEORY
2.3.1 Introduction:
The development of agriculture is important for over-all development of
an economy. Therefore, many economists have developed various theories
suggesting ways and means for development of agriculture in
underdeveloped countries. In this regard, T.W Schultz has made a
significant contribution.
Schultz, in his books „Transforming Traditional agriculture which was
published in 1964, has suggested various ways and means to develop
traditional agriculture. In his theory, he discusses some important aspects
of the problem of transformation of traditional agriculture. Schultz‟s
theory of agricultural transformation can be discussed under the following
heads.

2.3.2 Definition of Traditional Agriculture:

The definition of traditional agriculture given by Schultz is different from
the definition given by other economists. According to Schultz, traditional
agriculture is one which is static and non-dynamic. Agriculture can be
capital intensive as well as productive yet it can be traditional in character,
if its art of cultivation is static and further development does not take
place. In that sense, even the agriculture of developed countries like
America can be traditional if the art of cultivation does not change and
become stagnant. To Schultz traditional agriculture is not necessarily a
backward and labour-intensive agriculture. He wanted that even capital-
intensive agriculture can assume traditional character in the long period
and eventually arrive at the equilibrium where the art of cultivation comes
to a halt that characterizes traditional agriculture. The agriculture will
remain traditional until the art of cultivation changes.
2.3.3 Characteristics of Traditional Agriculture:
After defining the traditional agriculture in his own ways, Schultz
discusses the two important characteristics of traditional agriculture which
are as follows:
1. Perfect allocation of resources: According to Schultz, there is
perfect allocation of resources in traditional agriculture. The static art
of cultivation enables the farmers to know, by long experience, about
the returns to various factors of production. So, they will allocate
resources and factors up to the point where the marginal returns of
these factors are equal to their respective marginal costs i.e. (MR = M
C). This is the condition for perfect allocation of resources. This
conclusion leads to the poor but efficient hypothesis. This hypothesis
states that the farmers in traditional agriculture are generally poor
because of stagnation of agriculture but due to long experience with

15
 the same art of cultivation, they are able to allocate resources Theories Of Agricultural
efficiently. Development

2. No zero-value labour: Many economists have argued that in

traditional agriculture marginal productivity of labour is zero.
However, Schultz is of the view that there is no zero-value labour in
traditional agriculture. According to him, marginal productivity of
labour in traditional agriculture may be low but not zero. To him, any
withdrawal of labour from the traditional agriculture will lead to
reduction in total output. He provided evidence to prove his argument.
He cited examples from Latin American countries Peru and Brazil
where labour was withdrawn from agricultu4re for engaging in
construction activity. Schultz found that in both the countries
withdrawal of labour from agriculture resulted to decline in
agricultural production. Thus, Schultz concludes that marginal
productivity of labour in traditional agriculture is positive and not
zero.

2.3.4 Schultz’s Suggestions for Transforming Agriculture:

Traditional agriculture, according to Schultz, is in equilibrium with static
art of cultivation. The traditional agriculture can be transformed by
introducing new factors which are more productive than the existing ones.
According to him there is a need to create new investment opportunities in
agriculture and the art of cultivation should be changed. It implies that
agricultural transformation can be achieved only with a etymological
transformation which constitutes new factors of production, new methods
and new skills. Schultz‟s suggestions are described as follows:
1. Policy approach: According to Schultz, there are two policy
approaches which can be adopted to faster the use of new factors by
the farmers. These are: market approach and command approach. In
the market approach farmers are given freedom to decide about the
adoption of new inputs. They are allowed to take decision based on
profitability of new factors. The role of government is confined to
development and distribution of new inputs, development of skills,
publicity, provisions of cheap credit etc. In this approach, farmers are
not forced to adopt new inputs. They enjoy freedom to choose
whether to adopt new inputs or not. Example, Mexico. On the other
hand, under the command approach the farmers not free to decide
regarding the use of new inputs. Everything is decided by the State.
The State supplies the new inputs and directs the farmers to use them.
The farmers have no choice, they have to adopt the new inputs
supplied by the state and in return, they have to give a portion of the
output to the state example Russia.

16
Agricultural Development 2. Transformation process: The processes of transformation depend on
and Policy
the demand and supply of new factors production. The new factors
should be more productive than the traditional factors and should
available in the market at the same time; farmers should be willing to
use such factors in their field. There are certain problems in supply of
new factors, Schultz discusses those problems and makes suggestions
which are as follows:

a) Supply of new factors: There is a need to ensure supply of new

factors in sufficient quantity and that too at reasonable prices. These
are important for their effective use and ensure profitability.
According to Schultz, three steps are involved in the process of supply
of new inputs which are as follows:

(i) Research and development

(ii) Distribution of new inputs to farmers and

(iii) Extension services to disseminate knowledge for use of new

inputs.

According to Schultz, the research and development of new inputs should

be done by the state because the private agencies may not have sufficient
resources to undertake such activities. A private firm may not be willing to
take up research and development as the benefits of such research cannot
be retained and is likely to flow to other firms. So the research and
development of new inputs should be carried out by the state or non-profit
making agencies.
b) Distribution of new inputs: Once the new inputs have been
developed, the next step is to build up necessary infrastructure for
their distribution to farmers; Schultz suggests that in the initial stage
there may be some difficulties in the distribution of new inputs. These
difficulties include – limited demand, high cost, resistance from the
supplies of traditional inputs etc. Therefore, we suggest that in the
initial stage the distribution of new inputs should be undertaken by the
State or non-profit making agencies.

c) Development of Extension services: a well-developed extension

services are needed to import knowledge to farmers about the method
for using new inputs. Schultz argues that the extension work may be
carried out by the state as it involves high cost.

d) Demand for new inputs: Supply of new inputs alone is not sufficient
for agricultural transformation. The new inputs must also be
demanded by the farmers for use in their field. In other words, there is
need to generate demand for new inputs.

17
According to Schultz, the demand for new inputs will depend on the Theories Of Agricultural
profitability. The profitability, in turn, depends upon two factors Development

(i) supply price of new inputs and

(ii) Prospective yield.

According to Schultz that in order to encourage the use of new inputs their
supply price should be low. He suggests that in the initial stage, the
government should supply new inputs at subsidized rates.
Apart from the supply price, the profitability of new inputs also depends
on prospective yields. Since the inputs are new the farmers are uncertain
about the yields from them. Therefore, the prospective yields of the new
inputs should be high so as to convince the farmers to use them.
3. Importance of skills in Agricultural Transformation: Skins and
knowledge are also important for the use of new inputs and
agricultural transformation. Therefore, the farmers should be imported
required knowledge about the use of new inputs. According to
Schultz, skills can be shaped in three ways:

(i) On the job training and short term and vocational courses

(ii) Schooling

(iii) Trial and Error Method

To Schultz, schooling which impart the general education is the best form
of investment and ways to build up human capital and form skills. He
cited the example of Holland and Denmark where the rapid growth of
agriculture in the last quarter of the19th century was associated with a
large investment in schooling.
2.3.5 Criticisms:
Schultz suggestions to transform traditional agriculture are, undoubtedly
good and realistic. However, his theory suffers from certain infirmities.
1. Definition of traditional agriculture not pragmatic: The definition
of traditional agriculture given by Schultz is not pragmatic and its
implications have been challenged by many economists.

2. Market approach: He favours market approach for agricultural

transformation without assessing the economic reality of
underdeveloped countries. In such economy‟s markets are poorly
organized and suffer from imperfections. Therefore, in the initial
state, state may have to undertake and control activities.

18
Agricultural Development 3. Ignores institutional reforms: Schultz has ignored the role of
and Policy
institutional reforms in the process of transformation of traditional
agriculture.

4. Ignores differences among poor economies: Schultz has also

ignored the difference among the poor economies with regard to
factor endowments, extent of monetization and administrative
efficiency etc. The use of new inputs is affected by these differences
which he did not consider.

5. Neglect non-economic barriers: Schultz has paid attention only to

economic factors in the transformation of traditional agriculture. He
has neglected non-economic barriers like religious belief,
conservatism and fatalistic attitude of farmers which can act as
barriers for adoption of new inputs.

2.3.6 Conclusion:
Despite these criticisms, it can be concluded that Schultz has made
important suggestions for transformation of traditional agriculture. His
analysis will certainly be helpful in formulating policies for agricultural
development. However, his suggestions will have to be adopted based on
the social and economies conditions prevailing in the given poor economy.

Check Progress:

1. Define Traditional Agriculture.

2. Explain the Characteristics of Traditional Agriculture.

3. What are you understand by transforming agriculture?

4. What are the limitations of Schultz‟s theory of agriculture

development?

2.4 MELLOR’S THEORY OF AGRICULTURAL

DEVELOPMENT
2.4.1 Introduction:
W.J. Mellor in his book entitled „The Economics of Agricultural
Development‟ which was published in 1966 suggested ways and means to
transform traditional agriculture into modern agriculture.

2.4.2 Agricultural Development:

According to Mellor, agriculture of an economy passes through three
phases:
A. Traditional agriculture

19
B. Technologically dynamic agriculture- low capital technology and Theories Of Agricultural
Development
C. Technologically dynamic agriculture- High capital technology

The main features of agriculture in these phases are described as follows:

A. Traditional Agriculture:

Mellor defines traditional agriculture in a pragmatic way. According to

him traditional agriculture is one which is backward, labour intensive
agriculture with low productivity. Most of the farms in traditional
agriculture are peasant farms in which bulk of labour force, management
and capital are supplied by the same household. The farms are generally
small in size and productivity production and net income tend to below.
But there is a perfect allocation resource in such agriculture.
The principle inputs used in traditional agriculture are land and labour.
The use of additional labour is the only source of increasing production
and income. But the use of more labour on a given farm heads to
diminishing marginal productivity.
Mellor pointed out that in traditional agriculture some non-traditional
inputs like fertilizers may be used but their impact on total production will
be negligible because of non-use of other complementary inputs like good
seeds, pesticides etc. He viewed that both technological changes and
institutional reforms are needed to transform traditional agriculture.

Characteristics of traditional agriculture:

1. Under-employment: According to Mellor, there is under-
employment in traditional agriculture. The main reason for this is
inequality in the distribution of land. The farmers having bigger farms
have the option to choose between leisure and work because of higher
income. This lends to under-employment. But the farmers operating
on small farms may have to use their labour up to the point where its
marginal productivity becomes zero.

According to Mellor, there are three types of income levels; these are as
follows:

(i) Biologically subsistence level of income: It is the level of income

which ensures only the biological subsistence, i.e., food, clothing,
shelter and other essentials for maintaining human life.

(ii) Culturally defined subsistence level of income.

(iii) Income for a dynamic society.

The farms in traditional agriculture can be broadly of two types:

a) Farms which can provide the biological survival level of income and

20
Agricultural Development b) Farms which can provide at the maximum, the culturally defined
and Policy
subsistence income.

In the first types of farms, labour will be used till its marginal productivity
becomes zero. In the second type of farms, the equilibrium level use of
labour will be determined by the tangency point of the production
possibility curve for the given farm and is utility curves.
1. Backward Sloping Supply Curve: According to Mellor, the total
supply curve for agricultural produce in traditional agriculture is
backward sloping. This is due to negative income effects on use of
labour when prices changes. The high prizes of agricultural produces
encourage farmers to reduce leisure and use more labour (positive
substitution). But when their income increases due to price size, then
farmers will tend to work less (negative income effects). Thus, a point
is reached when the negative income effect fully neutralizes the
positive substitution effect on labour use and total production starts to
fall and curve slopes backward.

2. Impact of withdrawal of labour: It is generally argued that there

exists zero value labour in agriculture and its withdrawal will not
reduce the total output. However, Mellor believed that any withdrawal
of labour from the agriculture will result in a fall in output. This is
because of increase in per capita income of remaining labours which
causes the use of less labour.

According to Mellor‟s view traditional agriculture will not change its

traditional character until and unless it is disturbed. The government has to
formulate a policy which aimed to bring technological changes.

B. Technologically Dynamic agriculture – Low capital technology:

In this phase, new inputs with high marginal productivity and

complementary to labour are used in agriculture. The use of such inputs
encourages the use of traditional inputs by raising their productivities. The
new inputs are friendly to traditional inputs and do not replace them. Some
of the new inputs are friendly to traditional inputs and do not replace them.
Some of the new inputs are fertilizers, new seeds and power.

At this point, agriculture still remains main occupation in the economy

As the labour is cheaply available so machinery is not used.
In order for a smooth progress of this phase Mellor points out that the
following are necessary
i. Institutional reforms
ii. Encouragement of research
21
iii. Supply of new and improved inputs Theories Of Agricultural
Development
iv. Lifting up of institutions to service agricultural production.
v. Development of communication system
vi. Educational Institutes are being established in order to train people.

vii. Establishment of educational institutions to train people.

In this phase of agriculture development, new technology is used but it is

not heavily capital oriented.

C. Technologically Dynamic Agriculture- High Capital Technology:

In this phase, the agriculture become highly capital intensive and uses new
technology which is heavily capital oriented. This stage comes when the
no agriculture sector come into existence which create labour-saving
mechanical innovations. In this agricultural sector, sufficient capital
accumulation takes place. Size of farm also increases due to movement of
people from agriculture to industrial sector. In this phase, heady
investment takes place in agriculture in the form of machinery. In this
phase, the new inputs replace labour from agriculture and increase the
productivity of the labour which is left in the agriculture.

Mellor pointed out that the development of agriculture should follow these
three phases for its smooth progress.

2.4.3 Critical Evaluation of Mellor’s Theory:

The definition of traditional agriculture given by Mellor is more

pragmatic. He defines traditional agriculture as on which is a backward
and uses labour as the main factor of production. He argues that if labour
is withdrawn from that agriculture, agricultural production will fall. But he
does not insist that there is no disguised unemployment in the agriculture
sector. His suggestions for transformation of agriculture emphasis are on
institutional changes like land reforms, marketing credit facilities. He
favours government intervention for development of agriculture.
Mellor emphasises on the role of labour and other inputs in the process of
development. In the traditional agriculture, output is increased by using
more labour on land till its marginal productivity become zero. But in
dynamic agriculture new inputs are used which increases the productivity
of labour.

Check Progress:

1. What are the phases of agriculture development?

2. Explain the Characteristics of Traditional Agriculture.
3. Critically evaluate Mellor‟s theory.
22
Agricultural Development
and Policy
2.5 VERNON RUTTAN AND YUJIRO HAYAMI’S
THEORY OF AGRICULTURE DEVLOPMENT
2.5.1 Introduction:
Syed Ahmad was one of the first agricultural economists to use a micro
approach.

He analysed agricultural production through technical innovation using an

Innovation Possibilities Curve, IPC. An envelope of different isoquant
curves that a given production level using various production functions the
entrepreneur plans to develop is called IPC or Innovation Possibilities
Curve. Ahmad in his theory assumed that the farmers can acquire new
technologies free of cost. In order to save on the factor of production
private firms and companies would invest in new technologies. However,
the aspect of public innovation has completely been ignored in Ahmad‟s
theory.

Ahmad‟s theory was used by Yujiro Hayami and Vernon to develop the
theory of induced innovation. They introduced iso-cost curves into
Ahmad‟s IPC model to analyse the effects on input prices on induced
innovation. They divided induced innovation into technical change and
institutional change. Change bought about by the change in the price of a
factor of production and technological change is termed as institutional
change. Institutional change happens when there is a change in the price of
the factor of production accompanied by technological change. This brings
us to the Theory Of Induced Innovation which was used to study
agricultural productivity on a micro scale.

2.5.2 The Theory of Induced Innovation:

Before we study the theory of induced innovation, we must first

understand iso-cost lines and isoquant curves. The iso-cost line identifies
all of the different combinations of inputs that can be purchased given the
Total Cost, TC. The slope of the iso-cost line equals the ratio of input
prices, − 𝑤/𝑟; which is negative because the iso-cost line is downward
sloping. W is the wages paid for the input labour and r is the rent paid for
the input capital. 𝑤/𝑟 is the rate at which one input can be substituted for
the other input. Total Cost equals the price of labour, w, times the quantity
of labour employed, 𝑄𝐿, plus the price of capital, r, times the quantity of
capital used, 𝑄𝐾. The iso-cost line moves northeast as the TC increases for
the firm allowing the firm to employ more inputs to produce more outputs.
The total amount of labour that can be hired equals TC/w and the total
amount of capital that can be purchased equals TC/r.

Equation 1: 𝑇𝐶 = [(𝑤 × 𝑄𝐿) + (𝑟 × 𝑄 𝐾)]

The isoquant curves are those possible production functions which the
firm could have to reach a certain level of output. The slope of the
isoquant curve equals the Marginal Rate of Technical Substitution, MRTS,
which is the Marginal Product of Labour divided by the Marginal Product
23
Capital, 𝑀𝑃𝐿/𝑀𝑃𝐾. The rate at which one input can be exchanged for the Theories Of Agricultural
other input in production is called Marginal Rate Of Technical Development
Substitution.

When the isoquant curves move up and to the right, on the graph, output
increases (shown by the expansion path in figure 1). The tangency point
on the graph is the point at which the slope of the iso-cost line equals the
slope of the isoquant curve, 𝑀𝑅𝑇𝑆 = 𝑤 / 𝑟 . If we break this equation
down, we get 𝑀𝑃𝐿/ 𝑀𝑃𝐾 = 𝑤/𝑟. Rearranging this equation, we derive the
new equation:

Equation 2: 𝑀𝑃 𝐿/𝑤 = 𝑀𝑃 𝐾/𝑟.

This is the cost-minimization principle, which says that a firm should

employ its inputs in a way where the marginal product of labour per dollar
spent on labour equals the marginal product of capital per dollar spent on
capital. Minimizing costs also means the farm wants to maximize profits
by reducing costs.

Figure 1: Shows the expansion path of the tangency points and as iso-cost
line moves northeast total costs increase and as the isoquants move
northeast output increases.

Now that we understand the iso-cost lines and isoquant curves, we can
develop the theory of induced innovation. When the firm invents new
technologies to save or use less of that input(s) whose relative prices have
increased in order to attain a certain level of output, it is called Induced
Innovation. The induced innovation theory is exactly the same as the iso-
cost line and isoquant curve theory; however, the IPC from Ahmad‟s IPC
theory is introduced to show the various isoquant curves the farm may
operate under. An envelope of different isoquant curves that have various
production functions to produce a given output is called the IPC
(Innovation Possibilities Curve). The increase in the output is
represented by a northeast shift in the IPC and vice-versa. In the following
three situations, the farm will try to get back to its original IPC, if there is
southwest shift which represents a decrease in the output on the graph.

24
Agricultural Development The cost of both the inputs may change at the same time and at the same
and Policy rate or the cost of single input may change where both situations cause the
farm or the government to innovate in order to save on the cost of that
factor of production and increase output.

The first scenario occurs when the price of capital and labour increase at
the same rate. Government R&D and policies will occur because an
increase in the relative price of both inputs causes the government to
invent through R&D and/or grants to save on those inputs called the
technical change effect. (see equation 3 below). The increase in relative
price for both inputs will also cause the farmer to innovate to save on
capital and labour. Increasing the relative price of both inputs means that
wage and the rent rise at the same rate. Graphically, this means that the
total cost will shift to the left to a new iso-cost line, B, isoquant curve, 𝐼𝑄𝐼,
and 𝐼𝑃𝐶𝐼 (see figure 2). A decrease in the output is represented by a shift
to the left, however by innovations, the r and w will reduce bringing the
output level back to IPC.

Equation 3: [(𝑤 × 𝑄𝐿) + (𝑟 × 𝑄𝐾)] = 𝑇𝐶 = 𝐼𝑠𝑜𝑐𝑜𝑠𝑡 𝐿𝑖𝑛𝑒 𝐴

When r and w rise at the same rate and then the consumption of both in
quantitative terms of both the inputs reduces and TC does not change.

[(↑ 𝑤 ×↓ 𝑄𝐿 ) + (↑ 𝑟 ×↓ 𝑄 𝐾 )] = 𝑇𝐶 = 𝐼𝑠𝑜𝑐𝑜𝑠𝑡 𝐿𝑖𝑛𝑒 𝐵

Innovation will occur to lower the price of w and r to get back to the
output at IPC on iso-cost line A.

Figure 2: Shows that as the price of capital and labour increase at the
same rate, meaning the slope does not change from iso-cost curve A to B,
will lead a firm and the government to innovate new ways to save on
capital and labour that have become more expensive to use to get back to
the previous output of IPC.

25
 Theories Of Agricultural
Development

In 1960, when the price of the staple crop, rice rose in China, this type of
induced innovation was initiated. The government was pushed into
developing a high yielding, stress resistant rice crop in order to combat the
high price of rice. This allowed the farmers to use a fewer unit of
expensive inputs like land and labour depending upon the region in order
to increase rice production. It was around the same time, that the
International Rice Research Institute IRRI, developed similar rice crops
which allowed the farmers to produce rice using lesser inputs as well.

The second scenario happens when the price of a single input rises causing
one of the two things to happen:

1) increase in the cost of one input moving the iso-cost line to the right
or left along the IPC because of the substitution effect or

2) an increase in the price of one input making the iso-cost line pivot on
the x-axis and move down along the y-axis.

The effect of the first option is caused by the increase in r lowering the
quantity of capital used and lowering called the substitution effect
(shown by equation 3 and figure 3). In this case, the output stays the same
by using less of the expensive capital and more of the cheaper labour.
Meaning, the iso-cost line stays on the same IPC and no shift occurs. This
means that the output will be the same after the price of capital increases
because the farm is on the same IPC curve by employing more labour and

26
Agricultural Development using less capital. The farm would increase output if it moved to a
and Policy different isoquant curve to the northeast on the graph.

Equation 3: [(𝑤 × 𝑄𝐿) + (𝑃𝑌 × 𝑄𝑌)] = 𝑇𝐶 = 𝐼𝑠𝑜𝑐𝑜𝑠𝑡 𝐿𝑖𝑛𝑒 𝐴

Where r increases causing the firm to innovate for capital, saves on K,

and use more labour in production of that output.

[(𝑤 ×↓ 𝑄𝐿) + (𝑟 ×↑ 𝑄𝐾)] = 𝑇𝐶 = 𝐼𝑠𝑜𝑐𝑜𝑠𝑡 𝐿𝑖𝑛𝑒 𝐵

Figure 3: Shows that as the price of capital rises, the farm will choose to
use more labour and less of capital. The rise in the price of capital causes
farmers to innovate to save on that factor of production to stay on the same
IPC having the same output as before.

The second option is that the iso-cost line will pivot on the x-axis from A
to B causing the farm to be on a new isoquant curve on the IPC to 𝐼𝑄𝐼
producing less output (see equation 4 and figure 4). This occurs because
the price increased for capital reducing the total amount of capital that can
be purchased and the price for labour stayed the same.

Equation 4: [(𝑤 × 𝑄𝐿) + (𝑟 × 𝑄 𝐾)] = 𝑇𝐶 = 𝐼𝑠𝑜𝑐𝑜𝑠𝑡 𝐿𝑖𝑛𝑒 𝐴

Where r increases causing the farm to use less capital and less labour, but
through innovation of capital, the farm can use more capital to shift back
to IPC to produce same output as before.

[( 𝑤 ×↓ 𝑄𝐿 ) + ( 𝑟 ×↓ 𝑄 𝐾 )] = 𝑇𝐶 = 𝐼𝑠𝑜𝑐𝑜𝑠𝑡 𝐿𝑖𝑛𝑒 𝐵

Figure 4: Shows as the price of capital increases the total amount of

capital used will decrease. Therefore, less capital and labour will be used
causing the farm to innovate to save on capital to shift back to IPC on iso-
cost line A.

27
 Theories Of Agricultural
Development

This theory was used by Ruttan and Hayami to describe the differences
between the agriculture in Japan and the United States from 1880-1890.
They did a comparison of the inputs of the farm draft horse power per
worker and fertilizer per hectare of agricultural land. Ruttan and Hayami
observed that as the price of the fertilizer increased in the United States
the agriculture solved this problem by having more draft horse power per
worker, more equipment in order to reduce the amount of fertilizer used to
produce crops. However, Japan faced another situation where the price for
farm draft power per worker was very expensive; therefore Japan
preferred using more fertilizer, which was a cheaper option then acquiring
more horsepower. This means that farms in the United States chose to use
technical innovation to increase horsepower per worker and Japan chose to
use institutional innovation by developing new types of fertilizers.

2.5.3 Induced Innovation in the Production Function:

In the first scenario, we saw that the price of labour and the price of capital
increased at the same rate causing the farm to innovate. Innovation
allowed the farm to use fewer amounts of labour and capital to produce
the same or more output than before. So, when the firm produces more
output as compared to its inputs the firm used to produce that output or
when the current marginal product is more than the previous marginal
product then it is called Increasing Returns To Scale. If you have a look
at this phenomenon graphically, you will see that though the total product
will be increasing but it will have a backward bend as the farm is using
lesser inputs to produce more output (as shown in the figure 5 below)
Figure 5: The production function is backward bending due to innovation
allowing the farm to use less capital to produce a higher output. This graph
represents the substitution effect the author graphed earlier in figure 4.

28
Agricultural Development
and Policy

Figure 5 shows the production outcome that is occurring because of

innovation. Point 𝑄1 corresponds to points 𝑄1𝐾 in figures 4.
The output represented by the slope of the Total Product Line, at each
point is equal to the Marginal Product of Capital. This graph simply
represents how the production is affected by one factor. The next step is to
add in land and labour giving the graph two more horizontal axes. This
would allow us to see the points at which induced innovation occurred,
wherever the backward bend lies, and go beyond the two-variable
isoquant-iso-cost graphs. In a typical isoquant-iso-cost graph, a shift to the
southwest of the isoquant curve indicates lower output; however, with
induce innovation theory, a shift southwest indicates that the farmer or the
government will invent new techniques or technologies to reach the same
or higher output level when the isoquant shifts southwest.

2.5.4 Conclusion and Limitations:

According to the theory of induced innovation, if the prices of both capital
and labour increase simultaneously or as the price of one input increases,
the government will innovate through R&D or government subsidies.
When this happens, the farms will be able to the cheaper input(s) to
produce either same amount of output at cheaper cost or more output at
the same cost.
According to the author the next step which needs to be taken is
determination of the lag-time to make the innovations fully effective, the
cost of R&D to the farm and the government, and develop a production
function and induced innovations graph containing land, labour, and
capital. The most difficult part to understand is the lag time for R&D to be
fully effective on production, and the length of time the innovations to
have effect on the production. Lag-time is hard to determine because the
observer does not know the exact impact the new innovations are having
on production or if something else is affecting production. Though there
have been many empirical studies on the subject of who account for lag-
time of innovation, but unfortunately, the estimates of various authors

29
have varied greatly. According to some authors average lag-time is 30 to Theories Of Agricultural
40 years however according to some others this period is only 6 to 14 Development
years whereas some others have given lag-time as long as 50 years. The
time factor is a tricky variable as it is very challenging to measure its
effect and to know when and for how long the lag time affects the
production. The next important thing which the author needs to understand
is the cost of R&D to the farm and the government. However, land grant
universities and USDA agencies have to take into account many costs to
develop new technologies because individual farms do not want to take on
these costs. Currently, the most R&D is undertaken by the large private
companies like Monsanto, Tyson, and Cargill. They have helped in
increasing the production with use of fewer inputs steadily over the years
by developing new crops, breeds of animals, pesticides and herbicides.
The author should understand the fact why government and firms take on
R&D even though the cost of the same it quite high even though the
benefits may be minimum. Last but not the least the author needs to
change or develop his Induced Innovations Theory by including more
inputs in his model. This would help him understand each variable‟s
impact on one another, production and understand why innovation occurs
(see figures 6 and 7). The author should develop the theory in such a way
that it includes lag-time, R&D cost and multiple variables. These will help
him understand when R&D and policies take effect and for how long,
reasons why governments and firms take on risky endeavours, and the
effects different variables have on productivity.

Figure 8: Initially the farm is at iso-cost line A on isoquant curve

1. Then the price of labour increases moving the farm to iso-cost line B
and isoquant curve

30
Agricultural Development 2. Therefore, the farm uses less labour and substitutes more land for
and Policy labour.
As labour decreases and land use increase, the amount of capital will
increase as well from 𝑲𝟏 to 𝑲𝟐. The use of more capital in response to the
increase in the use of land is due to the buying of more equipment and
other technologies in place of labour. Output stays the same in this case
and innovation occurs so the farm can use less labour and more land and
capital.

Check Progress:

1. Explain the theory of induced innovation.

2. Explain induced innovation in production function.

3. What are the limitations of induced innovation theory?

2.6 SUMMARY
This unit discussed the various theories of agricultural development. The
Lewis theory focuses on the process of development of a labour surplus
country through the transfer of surplus labour from the traditional
agricultural sector to modern industrial sector. However, the model calls
of generating agricultural surplus for labour transfer the Schultz and
Mellor‟s theories suggests various ways and means to transform
traditional agriculture. Ruttan and Hayami‟s theory explains induced
innovations in agricultural development.

2.7 QUESTIONS
1. Critically evaluate Lewis theory of agriculture development.

2. Explain Schultz‟s theory of agriculture development.

3. Explain Mellor‟s theory of agriculture development

4. Explain Ruttan and Hayami‟s theory of agriculture development.

Reference: Soni, R N, Leading issues in Agricultural Economics, Vishal

Publishing Co. Ellis, Frank, Peasant Economics, Farm Household and
Agrarian Development, Prentice Hall. Basu, K; Analytical Developed
Economy, Oxford University Press

*****

31
 MODULE II

3
SUSTAINABLE AGRICULTURAL
DEVELOPMENT AND FOOD SECURITY-I
Unit Structure
3.0 Objectives
3.1 Introduction
3.2 Impact of Green Revolution in India
3.3 Model of Spread of technology and experience in inputs use
efficiency
3.4 Summary
3.5 Questions

3.0 OBJECTIVES

 To know the Impact of Green Revolution in India.

 To know the Spread of technology and its effect on
agriculture.
 To know experience in inputs, use efficiency.

3.1 INTRODUCTION

Ever since the mid-1960s, the modern technology and farm

practices in India and a veritable revolution is taking place in
our country which is gradually replacing the traditional
agricultural practice. In 1960-61 Intensive Agricultural District
Programme was launched in which pilot project in seven
districts in which new technology was tried. This strategy was
extended to the entire country once High-Yielding Varieties
Programme (HYVP) was introduced. Different names have
been given to this strategy which is as follows: modern
agricultural technology, seed-fertiliser-water technology, or
simply green revolution.
It is mainly due to new agricultural strategy that, area under
improved seeds has gone up since 1966. As the new varieties
are of a short-term duration, instead of growing one crop, two
crops and sometimes, even three crops are grown. In the case of
32
Agricultural Development wheat, there was a huge enthusiasm among farmers in Punjab,
and Policy
Haryana, Delhi, Rajasthan and western U.P. for new Mexican
varieties like Larma Rojo, Sonara-64, Kalyan and P.V. 18 this
led to a situation where the demand for seeds by the farmers
exceeded the supply of the same.
Indigenous inputs such as the use of bullocks, simple ploughs
and primitive agricultural tools, organic manures, seeds, etc.
were the main inputs for traditional agriculture. Modern
technology, on the other hand, consists of Chemical fertilizers,
pesticides, improved variety of seeds including hybrid seeds,
agricultural machinery, and extensive irrigation, use of diesel
and electric power etc. It was since 1966, that the use of modern
agricultural inputs has increased at a compound rate of 10 per
cent per annum in contrast to the traditional inputs which were
rising at the rate of only one per cent per annum during the
same period.
Fertilisers, pesticides, agricultural machinery etc. which are
produced outside the agricultural sector are the main resources
of the new agricultural technology. It is mainly because of this
that the industries supplying the modern farm inputs are
growing at a rapid rate. Huge programs of farm mechanisation
and irrigation have also led to an increase in the consumption of
electricity and diesel in rural areas.

3.2 GREEN REVOLUTION AND ITS IMPACT

With the introduction of new techniques of agriculture in early

1960s which became popular by the name of Green Revolution
(GR) - firstly these techniques were used for wheat and by the
next decade for rice too. It increased the food productivity by
increasing the productivity level by more than 250 per cent thus
completely changing the traditional idea of food production
level. The Green Revolution was centred on the use of the High
Yielding Variety (HYV) of seeds developed by the US agro-
scientist Norman Borlaug doing research on a British
Rockfellor Foundation Scholarship in Mexico by the early
1960s. The new wheat seeds developed claimed to have
increased the productivity by more than 200 per cent. After the
successful testing of the seeds, the farmers in food deficient
countries like Mexico and Taiwan were using it.

33
3.2.1 The Architects of Green Revolution: Sustainable Agricultural
Development And Food
M.S. Swaminathan is one of India‘s most renowned agricultural Security-I

scientists and is regarded as the father of Green Revolution in

India because of his contribution to the introduction and
development of high-yielding verities of wheat in India. His
range of research work is very wide and he continues to pursue
his research through M.S. Swaminathan Research Foundation.
He is the founder and chairman of this institute. The
Government of India conferred on him the Padam Vibushan in
1989.
Chidambaram Subramaniam provided visionary leadership for
realisation of Green Revolution as the Minister for Food and
Agriculture in the second half of 1960s. The Indian government
conferred on him the Bharat Ratana in 1998.
Dr. Norman Borlaug was an American agricultural scientist and
agronomist who was awarded the Nobel Peace Prize in 1970 for
increasing world food supply and feeding the hungry world. For
his contribution to ushering in Green Revolution in India, the
Indian government conferred on him the Padma Vibhushan in
2006.
3.2.2 Agricultural Diversification during Green Revolution:
The case of Green Revolution in India represents a fine
example of technology – induced agricultural diversification. It
also represents a typical example of agricultural diversification.
It also represents a typical example of agricultural
diversification through regional specialisation. The period of
mid 1960s is very significant from the point of view of
agricultural development in India. Anew high yield varieties of
seeds were developed in Mexico, which were adopted by many
countries, including India. The use of this HYV seeds required
regular and adequate irrigation, fertilizers and pesticides. This
new technology created the opportunity of agricultural
development through agricultural diversification, mainly
towards wheat and rice crops. The area under wheat and rice
farming increased substantially, particularly in the states of
Punjab, Haryana and Western Uttar Pradesh as these states
diversified crops towards wheat and rice in a big way. As a
result of diversification towards the production of wheat and
rice, these states were able to achieve substantial agricultural

34
Agricultural Development development. There was a spectacular growth in food grains
and Policy
production, as a result of which the country was able to achieve
self-sufficiency in food grains.
3.2.3 Components of the Green Revolution:
The Green Revolution was based on the timely and adequate
supply of many inputs/components. A brief review on the
Green Revolution is given below:
1. The HYV Seeds: These seeds were popularly called the
‗dwarf‘ variety of seeds. With the help of repeated
mutations, Mr. Borlaug had been able to develop a seed
which was raised in its nature of nutrients supplied to the
different parts of the wheat plant—against the leaves, stem
and in favour of the grain. This made the plant dwarf and
the grain heavier—resulting in high yield. These seeds were
non-photosynthetic, hence non-dependent on sun rays for
targeted yields.
2. The Chemical Fertilizers: The seeds were to increase
productivity however the primary condition was that they
received a sufficient level of nutrients from the land. The
nutrient level they required could not be supplied with the
traditional composts because they have low concentration of
nutrients content and required bigger area while sowing
which means that it will be shared by more than one seed.
This the reason why a high concentration fertiliser, were
required, which could be given to the targeted seed only, the
only option was the chemical fertilisers - urea (N),
phosphate (P) and potash (K).
3. The Irrigation: A means of controlled supply of water is
required for controlled growth of crops and adequate
dilution of fertilizers. It made two important compulsions –
firstly, the area of such crops should be at least free of
flooding and secondly, artificial water supply should be
developed.
4. For dilution of fertilizers and controlled growth of
crops: A regulated supply of water was needed. Two things
were made compulsory, which were that there should be no
flooding in areas of such crops, and secondly artificial
resources for water supply should be developed.

35
5. Chemical Pesticides and Germicides: As the new seeds Sustainable Agricultural
Development And Food
were new and non-acclimatised to local pests, germs and Security-I
diseases than the established indigenous varieties, use of
pesticides and germicides became compulsory for result-
oriented and secured yields.
6. Chemical Herbicides and Weedicides: In order to prevent
costlier inputs of fertilisers not being consumed by the herbs
and the weeds in the farmlands, herbicides and weedicides
were used while sowing the HYV seeds.
7. Herbicides and weedicides: were being used while
sowing the HYV seeds in order to prevent inputs of
fertilizers not being consumed by the herbs and the weeds
in the farmlands.
8. Credit, Storage, Marketing/Distribution: Availability of
easy and cheaper credit was compulsory in order to make
the farmers capable of using new and costlier inputs of the
Green Revolution. As specific regions only had this new
kind of farmlands, this new kind of farming became
concentrated in those few regions namely Punjab, Haryana
and Western Uttar Pradesh in India, in this case the storage
of the harvested crops had to be done in the region itself
until they were distributed in the entire country. It was
mainly the food-deficient countries which opted for Green
Revolution and were in need that the new yield gets
distributed throughout their boundaries which required a
proper marketing chain, distribution network and a strong
transport framework. All these infrastructural requirements
for the Green Revolution where met by the loans borrowed
from the World Bank on very borrower friendly terms – the
major beneficiary of the same was India.
3.2.4 Green Revolution and its impact:
Modernisation of Indian agriculture began during the mid-
sixties, which led to ‗Green Revolution‘. During the late 1950s
and 1960s, there emerged a severe food crisis in the country due
to several natural calamities and due to increased demand for
food grains resulting from increase in population. The inability
of Indian agriculture to meet the demand for food was a matter
of serious concern. The Indian agricultural system was not able
to produce enough food grains to feed its population as

36
Agricultural Development knowledge and practices followed were traditional from
and Policy
generation to generation which were not able to meet the food
grains requirements of the ever increasing population. As a
result, the government was forced to import food grains from
other countries. The ignominy of our dependence for food on
western developed countries and the politics of food aid
practised by them made the government realise that the country
needed to be self-sufficient in food grains production. There
was the need for drastically increasing the production of food
grains in the country by modernising agriculture. The Green
Revolution became the government‘s most pivotal programmes
in the 1960s.
The term ‗green revolution‘ has been used in the context of a
significant breakthrough in the production of food grains,
mainly wheat and rice, in India since the decade of mid-1960s
by using new agricultural practices, gradually replacing the
traditional agricultural practices. Traditional agricultural
practices were characterised by the use of indigenous input such
as organic manures, seeds, simple plough and other agricultural
tools. The modern technology, on the other hand, consisted of
use of high yielding variety of seeds, chemical fertilizers,
pesticides, extensive irrigation, agricultural machinery, etc. The
new agricultural technique was introduced as a ‗package
programme‘ to include joint and simultaneous application of
HYV seeds, fertilisers, pesticides, agricultural technology,
‗seed- fertiliser- water- technology‘ or simply ‗Green
Revolution‘. The new technology was nick named as Green
Revolution because it came suddenly, spread quickly as brought
dramatic results in the form of a large increase in agricultural
production and productivity over a short span of time. Green
Revolution covered a total area of 78 million hectares, i.e.,
about 55 per cent of the net sown area, in 1998-99.
The main effects of Green Revolution are listed as under:
1. The major achievement of the Green Revolution has been a
substantial increase in production of food grains. Food
grains production increased sharply from 82 million tonnes
in 1960-61 to over 176 million tonnes in 1990-91. It
touched the record level of 296 million tonnes in 2019-20.
2. A major achievement of the Green Revolution is that India
has become self-sufficient in the production of food grains.

37
3. The new technology also brought about a sharp rise in the Sustainable Agricultural
Development And Food
yield of land with respect of food grains. For example, the Security-I
yield per acre of wheat increased by 3.8 times between
1960-61 and 2017- 18.
4. A significant increase in food grains production and
productivity as a result of Green Revolution demonstrates
that Indian agriculture is on the move. Agriculture sector is
no longer a stagnant sector. This has made agriculture
sector a partner in economic development. As a result,
income has increased and economic conditions of the
farmers have improved.
5. However, the achievements of Green Revolution were at the
expense of ecology and environment. Extensive dependence
on chemicals and pesticides has started showing its darker
side. The modern system of farming in India has resulted in
decrease in land fertility of late, damage to environment,
chemical contaminations etc. this is reflected in soil erosion,
soil salinity, soil contamination, genetic erosion etc.
There were both positive as well as negative impacts of the
Green Revolution both on socio-economic as well as ecological
fronts on the countries around the world. However, we are
going to specifically study India here.
1. Socio-economic Impact: The way in which the food
production rose for wheat in 1960s and rice by 1970s that
many countries became self-sufficient, the concept of self-
sufficiency is not be confused with food security and some
nations even emerged as the food exporting nations. But the
difference in farmers‘ income, it brought with itself
increased the inter-personal as well as inter-regional
differences/inequalities in India. An increase in the
incidence of malaria due to water-logging, a swing in the
balanced cropping patterns in favour of wheat and rice
putting pulses, oilseeds, maize, barley on the side-lines, etc.,
were negative impacts.
2. Ecological Impact The most devastating negative impact of
the Green Revolution was ecological. When the problems
related with it were raised by the media, scholars, experts
and environmentalists, neither the governments nor the
masses (what to say of the farmers of the GR region - they

38
Agricultural Development were not literate enough to understand the side effects of the
and Policy
inputs of the GR) were convinced. But a time came when
the government and other government agencies started
doing homework and investigations focussing on the
ecological and environmental issues. The major ones among
them may be looked in their chronological order:
I. Critical Ecological Crisis: On the basis of on-field
researches it was found that critical ecological crises in the
GR region are showing up –
a) Soil fertility being degraded: The major reasons for soil
fertility degradation were excessive exploitation of land,
repetitive kind of cropping style, crop intensity, lack of
suitable crop combination etc.
b) Water table falling down: As the new HYV seeds required
comparatively very high amount of water for irrigation—5
tonnes of water needed to produce 1 kg of rice.
c) Environmental degradation: Due to excessive and
uncontrolled use of chemical fertilizers, pesticides and
herbicides have degraded the environment by increasing
pollution levels in land, water and air. In India it is more
due to cutting down of the forests and extension of
cultivation in ecologically fragile areas. At the same time,
there is an excessive pressure of animals on forests—mainly
by goats and seeps.
II. Toxic Level in Food Chain: Toxic level in the food chain
of India has increased to such a high level that nothing
produced in India is fit for human consumption. Basically,
uncontrolled use of chemical pesticides and weedicides and
their industrial production combined together had polluted
the land, water and air to such an alarmingly high level that
the whole food chain had been a target of high toxicity.
3.2.5. Conclusion:
The above studies and the reports were eye-openers in the area
of ecologically non-sustainable kind of agriculture as well as a
big question mark on its. It was mainly due the above studies
that the scientists started advocating the evergreen revolution
which could revolutionize the agricultural sector. The
Economic Survey of 2018-19 showed that India needed to

39
change its outlook of ‗green revolution‘ led productivity to Sustainable Agricultural
Development And Food
‗green method‘ sustainability like ‗zero budget natural farming‘ Security-I
in order to remove the use of chemical pesticides and also
encourage agricultural practices which are eco-friendly and also
consume less amount of water.
Check Progress:
1. What do you understand by Green Revolution?
2. Who are is the Architects of Green Revolution?
3. What are the Components of the Green Revolution?
4. What are the positive impacts of Green Revolution?

3.3 MODEL OF SPREAD OF TECHNOLOGY AND

EXPERIENCE IN INPUTS USE EFFICIENCY

―The secret of rapid agricultural progress in the underdeveloped

countries is to be found much more in agricultural extension, in
fertilisers, in new seeds, in pesticides and in the water supplies
than in altering the size of the farm, in introducing machinery,
or in getting rid of middlemen in the marketing process.‖–
W.A. Lewis.
Progressive agriculture will demand among other things (i.e.
favourable institutional and organisational structure),
improvement in inputs and methods. Irrigation facilities, better
seed quality, better quality of manures and fertilisers, land
reclamation and soil conservation methods, plant protection,
use of mechanisation etc. these are various facets of agricultural
inputs which have to be considered here.
3.3.1 Irrigation:
The Planning Commission categorised irrigation
projects/schemes in India on the following lines:
i) Major Irrigation Schemes: those with cultivable
command areas (CCA) of more than 10,000 hectares.
ii) Medium Irrigation Schemes: those with cultivable
command areas (CCA) between 2,000 and 10,000 hectares.
iii) Minor Irrigation Schemes: those with cultivable
command area (CCA) up to 2,000 hectares. Expansion of

40
Agricultural Development irrigation amenities, along with consolidation of the existing
and Policy
systems, has been the main part of the plan for increasing
production of food grains.
There is need to increase the acreage under irrigation along with
adoption of suitable technologies for efficient use of water
through apt pricing to raise agricultural productivity in India.
This could be done through - (i) Adoption of irrigation tools
which improve effectiveness in the use of water is imperative in
a scenario where flood irrigation has resulted in wastage of
water. (ii) Focus on effective irrigation tools is important with
increasing water shortages owing to climate change and
indiscriminate wastage of water in agriculture and other uses.
Having ‗more crops per drop‘ through effective irrigation tools
should be the motto to improve productivity in agriculture
which can ensure food and water security in the future.
Irrigation Potential & Use:
According to the latest available statistics on irrigation, the all
India percentage distribution of net irrigated area to total
cropped area during 2012–13 was 33.9 per cent. There is
regional disparity in irrigated farming, with net irrigated area to
total cropped area at more than 50 per cent in the states of Uttar
Pradesh, Tamil Nadu and Punjab, while it is at less than 50 per
cent in the remaining states. There is need and possibility for
increasing the coverage of irrigated area across the nation to
increase productivity in agriculture. The entire UIP (Ultimate
Irrigation Potential) of India is about 140 million hectares
(Mha). There is considerable gap between IPC (Irrigation
Potential Created) and IPU (Irrigation Potential Utilized). There
is noticeable decline in the ratio of IPU to IPC mainly due to:
(i) lack of proper operation and maintenance,
(ii) Incomplete distribution system,
(iii) Non-completion of command area development,
(iv) Changes in cropping pattern and
(v) Diversion of irrigated land for other purposes.
There is need to halt the falling trend in efficient utilization of
irrigation potential and also reverse it. A larger share of funds
available under the Mahatma Gandhi National Rural

41
Employment Guarantee Scheme (MGNREGS) and other Sustainable Agricultural
Development And Food
employment generating schemes need to be deployed for Security-I
promotion of irrigation - for formation and maintenance of
community assets, de-silting and overhaul of tanks and other
water resources.
Irrigation Efficiency:
Agricultural productivity can be boosted in a big way by
enhancing irrigation efficiency in the use of irrigation systems.
Over the time, the conventional systems of irrigation have
become nonviable in many parts of India due to:
(i) Increasing shortages of water,
(ii) Wastage of water through over irrigation, and
(iii) Concerns of salination of soil
Economically and technically efficient irrigation tools like –
drip irrigation and sprinkler irrigation can improve water
utility; reduce costs of production by reducing both the labour
costs and power consumption. With this technology, additional
area can be irrigated with the same amount of water when
compared to conventional method of irrigation. In addition,
water deficient areas, cultivable waste land and surging land
areas can be brought under cultivation due to ease of irrigation.
There is also good scope for using this technology in closely
spaced crops like potato, onion, wheat, rice etc. Farm income
has seen a substantial growth caused by multiple benefits which
accrue out this technology:
 Saving of irrigation water from 20 to 48 per cent;
 Energy saving from 10 to 17 per cent;
 Saving of labour cost from 30 to 40 per cent;
 Saving of fertilizers from 11 to 19 per cent; and
 Increase in crop production from 20 to 38 per cent.
To promote the cause of enhancing the productivity of water
and efficiency of irrigation. Government has taken the
following steps in the direction:

42
Agricultural Development i) Pradhan Mantri Krishi Sinchayee Yojana (PMKSY):
and Policy
was launched in 2015-16 with the motto of Har Khet Ko
Paani which aims at providing end-to-end solutions in
irrigation supply chain (i.e., water sources, distribution
network and farm level applications).
ii) Per Drop More Crop: component of PMKSY (PMKSY-
PDMC) was launched in 2015-16 the main objective of this
program is to increase water use efficiency at farm level.
iii) Micro Irrigation Fund (MIF): has been created with
NABARD (with a corpus of Rs.5000 crore) to enable the
States in mobilizing the resources for expanding coverage
of Micro Irrigation.
Water Productivity:
Water productivity in India is very low. The overall irrigational
effectiveness of the major and medium irrigation projects in
India is projected at around 38%. As per the NITI Aayog,
efficiency of the surface irrigation system can be enhanced
from about 35%-40% to around 60% and that of groundwater
from about 65%-70% to 75%. The productivity of water needs
to be enhanced by the following methods –
i) Tapping, harvesting and recycling of water,
ii) Effective on-farm water management practices,
iii) Micro irrigation,
iv) Use of waste water, and
v) Resource conservation technologies.
In order to promote judicious use of water ensuring ‘more crop
per drop’ of water in agriculture for drought proofing, the
Government of India recently launched the PMKSY aiming at
providing water to every field of agriculture.
3.3.2 Farm Mechanisation:
Introduction of better equipment for each farming operation in
order to reduce toil, to improve efficiency by saving on both
time and labour, improve productivity, minimize wastage and
reduce labour costs for each operation is the need of the hour in

43
India. Agricultural automation in case of India is increasingly Sustainable Agricultural
Development And Food
needed as: Security-I

i) Due to shortage of labour for agricultural operations owing

to rural-urban migration, shift from agriculture to services
and rise in demand for labour in non-farm activities, there is
need to use labour for agricultural operations prudently,
which makes a strong case for automation of farming.
ii) Indian agriculture has a high percentage of female work-
force in both the cultivation and processing stages of
farming. Therefore, ergonomically designed tools and
equipment for reducing labour, enhancing safety and
comfort and also to suit the needs of women workers would
help in better adoption of technologies in agriculture.
iii) An effective use of agricultural machinery helps in timely
farm operations for quick rotation of crops on the same land
(necessary in wake of shrinking land). By rising a second
crop or multi-crops from the same land, there is
improvement in the cropping intensity and making
agricultural land commercially more viable (NABARD,
2018).
Though, farm mechanisation has improved in the recent times,
which stands at 45 per cent, it is much lower in comparison to
USA (95 per cent), Brazil (75 per cent) and China (57 per cent).
There are intra-national differences also visible with northern
India having higher mechanisation compared to other regions.
Farm mechanisation (sales of tractor and power tillers) and
tractor industry in the country had compounded annual growth
rate (CAGR) of 10 per cent and 7.53 per cent during 2016-
2018, respectively.
Important reasons for lower agricultural mechanisation in the
country, as per a study (NABARD, 2018), economies of
operation due to small holdings, access to power, credit cost
and procedures, uninsured markets and low awareness. In
recent times (since 2014-15 onwards), several new steps are
taken by the government to promote farm mechanisation in the
country:
 Assistance is being provided by the state governments to
provide training/demonstration, provide assistance to the
farmers for procurement of agricultural machineries and for
44
Agricultural Development setting up of Custom Hiring Centre under the Sub-Mission
and Policy
on Agricultural Mechanisation (launched in 2014-15)
 The latest technology agricultural machineries like the
happy seeders, laser levellers, power weeders and combine
harvesters are being promoted.
 Under the new Central Sector Scheme on ‗Promotion of
Agricultural Mechanisation for In-Situ Management of
Crop Residue in the States of Punjab, Uttar Pradesh, NCT
of Delhi and Haryana (2018-19 to 2019-20) individual
farmers are being provided with 50% subsidy for
agricultural machines and equipment for in-situ crop residue
management (aimed at fighting the stubble burning in the
region while the Custom Hiring Centres are being provided
with 80% subsidy for the same purpose.
 Realising the linear relationship between availability of
farm power and farm yield farm power availability is to be
enhanced from 2.02 kW per ha to 4.0 kW per ha by 2030 (to
cope up with increasing demand for food grains).
3.3.3 Seed Development:
The primary input for increasing productivity in agriculture is
seed. On the basis of the estimates it is found that the quality of
seed accounts for 20 to 25 per cent of productivity. Thus, the
acceptance of quality seeds needs promotion in India. There are
numerous challenges to the development and adoption of
quality seeds in the form of
i) Insufficient research inputs for development of new seeds
especially,
ii) Early ripening and resilience (to pest, moisture variations,
etc.) varieties,
iii) Unaffordable cost of seeds for small and marginal farmers,
iv) Shortage of supply of quality seeds,
v) Issues relating to adoption of Genetically Modified Seeds
remain unresolved.
vi) Inadequate number of players restricting competition.

45
The issues that require immediate attention are: Sustainable Agricultural
Development And Food
Security-I
i) Affordability: Open pollinated varieties of seeds can be
developed by farmers from their own harvested crops.
However, for high-yielding mix varieties, the farmer has to
depend on the market for each crop which gets very costly
for the small and marginal farmers.
ii) Availability: Quality seeds have shortage in supply. While
there is a demand for prohibiting non-certified seeds,
certification per-se does not ensure quality seeds. Presence
of more competitors (both public and private) and
competition in the market for seeds would improve this
situation.
iii) Research and development of seeds and seed
technology: The first Green Revolution was driven by
indigenously developed High Yielding Varieties (HYVs) of
seeds for paddy and wheat. Insufficient research and genetic
engineering have been a constraint in the development of
seeds and seed technologies in major crops during the past
few decades in India. There is need to encourage
development of seed technologies in both private and public
sectors to initiate another round of Green Revolution. This
40 41 development should cover all agricultural segments.
iv) GM crops and seeds: Concerns about its affordability,
environmental and ethical issues, and risks to the food
chain, disease spread and cross pollination have resulted in
their non-introduction.
3.3.4 Fertilisers:
In improving agricultural output, fertiliser is an important and
costly input. Ever since the Green Revolution (mid-1960s),
there has been a sharp increase in the use of fertilizers in India.
To ease and encourage the use of fertilizers, the Government
has been providing fertilizer subsidy to farmers. Currently, the
fertiliser subsidies stand at around 8 per cent of the total
agricultural GDP.
However, the use of fertilisers has not resulted in proportionate
growth in agricultural productivity. The decreasing response
ratio or marginal productivity of fertilisers since the 1970s is a
pointer to their inefficient use in Indian agriculture. The yield of

46
Agricultural Development grain per kilogram use of NPK fertilizer has reduced from 13.4
and Policy
kg grain per ha in 1970 to 3.7 kg grain per ha in irrigated areas
by 2015-16.
In the post Green Revolution agriculture scenario, there have
been inequities in the use of fertilizers such as –
i) Unnecessary dependence on urea owing to low/distorted
prices of fertilisers, especially urea and regional imbalance
in the use,
ii) Ignore/low use of compost, manure and other forms of
natural nutrient providers,
iii) Stopping practices of inter and rotational cropping.
iv) Deviation of the use of subsidised fertilisers to non-
agricultural use.
v) Undifferentiating use of fertilisers has not proportionally
improved the yield of crops, but has resulted in the
depletion of soil fertility and salination of soil in many
areas.
Certain developments in fertilisation needed in the Indian farm
sector may be summed up as follows:
i) Crop-responsive & balanced use of fertilisers: There is
need to enable the optimal use of fertilisers depending on
the soil health and fertility status. Connecting the soil health
card to provide profile of the soil and fertilizer on the basis
of the same profile utilizing fertilizer, (even if not
subsidised) can improve the yield of crops.
ii) Micro nutrients & organic fertilisers: Indian soils show
lack of micro nutrients (like boron, zinc, copper and iron) in
most parts of the country which limiting crop yields and
productivity. Fertilisers which increase micro nutrients can
provide an additional yield in cereals in the range of 0.3 to
0.6 ton per hectare. This shortage can be overcome if there
by expansion in the use of organic fertiliser. Besides, being
inexpensive to use organic composting and manure it can
help improve and retain soil fertility, too. There is great
scope for increasing the use of organic fertilisers as around
67 per cent of Indian soil is characterised by low organic
carbon.

47
iii) Nutrient management: To maintain soil health and Sustainable Agricultural
Development And Food
productivity, thoughtful use of chemical fertilisers, bio- Security-I
fertilisers and locally available organic manures like
farmyard manure, compost, vermi-compost and green
manure based on soil testing is essential. With over 12 crore
farm holdings in India, it is a big challenge to provide soil-
testing facilities for overwhelming the multi-nutrient
deficiencies in soils so as to improve agricultural output.
Use of information technology and providing soil fertility
maps to farmers can go a long way in effective nutrient
management.
iv) Regional disparity in fertilizer consumption: India has
wide regional differences in the consumption of fertilizers.
This may be credited to the availability of irrigation
facilities in the high consuming states (since irrigation is a
requirement for proper absorption of fertilizers). It is
necessary to decrease the differences through appropriate
soil-testing facilities and other policy measures.
Rising fertilizer subsidy bill (estimated to be ₹80,000 crores in
2019-20 in comparison to about ₹70,000 crores of 2018-19),
has been a major concern in the area of fiscal management for
the country. In order to rationalize the fertilizer subsidy the
government has taken some important steps in recent years –
 All fertilizer subsidies are being distributed through the
Direct Benefit Transfer (DBT) system since late 2016-17.
Under this system, the subsidies are paid to the fertilizer
companies on the basis of actual sales made by the retailers
to the beneficiaries (identifying them through Aadhaar
Card, KCC, Voter Identity card, etc.).
 The New Urea Policy-2015 has been notified with multiple
goals—maximizing home-grown urea production,
promoting energy competence, and justifying subsidy
burden.
 In case of P (phosphate) and K (potash) fertilizers, the
Government is executing the Nutrient Based Subsidy (NBS)
scheme under which a fixed amount of subsidy is given
based on their content.

48
Agricultural Development 3.3.5 Pesticides:
and Policy
Due to the occurrence of weeds, pests, diseases and rodents, the
crop harvest losses range from 15 to 25 per cent in India. Even
though insecticides are vital for improving crop yields, per
hectare pesticide use is much lower in India in comparison with
other countries. Presently, India uses a low amount of 0.5 kg
per ha insecticide compared to 7.0 kg per ha in the USA, 2.5 kg
per ha in Europe, 12 kg per ha in Japan and 6.6 kg per ha in
Korea. Besides, there are certain concerns regarding
insecticides use in the country –
i) Use of pesticides without following proper guidelines,
ii) Use of substandard pesticides, and
iii) Lack of awareness about pesticide use.
These practices have given increase to insecticide remains
being found in food products in India, posing major threats to
the environment and human beings. Some policy steps which
may be recommended in this regard are:
i) Farmers need to be taught about the classification of
insecticides on the basis of their poisonousness and their
suitability for aerial application.
ii) The CIBRC (Central Insecticide Board and Registration
Committee) has issued rules for the application of
insecticides, their dosage, minimum intervals to be
maintained, and the levels of poisonousness. This
information needs to be widely spread among farmers.
iii) Greater focus on IPM (Integrated Pest Management) which
will include a careful mix of pest control methods by
leveraging the cultural, mechanical, biological methods and
need-based use of chemical pesticides. It favours the use of
bio-pesticides and bio-control agents, too.
Being environment friendly, non-lethal and cost effective, bio-
pesticides need to be encouraged among small farmers to
improve productivity in agriculture.
3.3.6 Conclusion:
At present, the agriculture sector of the country is undergoing
structural changes which are opening up new challenges and
49
openings. The initiatives taken by the Government in this Sustainable Agricultural
Development And Food
regard are multi-dimensional and oriented towards changing the Security-I
sector:
 Agricultural marketing
 Initiation of technology
 Implementation of Direct Benefit Transfer (DBT) mode for
timely delivery of extension services, credit and other inputs
to small and marginal farmers.
 Encouraging farm diversification so that risks to farm
income can be reduced by facilitating the development of
agricultural sub-sectors like livestock and fisheries.
The latest Economic Survey 2019-20, has given the following
advices to make farm income lucrative and realise the aim of
doubling farmers‘ income in the country:
 Allied sectors (such as animal husbandry, dairying and
fisheries) need to be reinforced to provide an assured
secondary source of income, especially for the small and
marginal farmers.
 As the percentage of small and marginal holdings is
substantially huge, land reform measures like liberating
land markets can help farmers in improving their income.
 To join the small holdings in better way appropriate use of
farm mechanisation is required.
 Irrigation facilities need to be extended together with
effective water conservation.
 Regional skewness in the disbursement of agricultural credit
should correct.
 Coverage of food processing sector needs to be ascended up
to create an additional source of market for agricultural
commodities.
 Efforts of farmers need to be accompanied with better
coverage of direct income and investment support.

50
Agricultural Development Check Progress:
and Policy
1. What are the steps taken by the government to improve
technology in Irrigation efficiency?
2. What do you understand by farm mechanisation?
3. What are the issues faced by farmers in seed development?
4. What are the measures taken by the government to improve
in fertilization?
5. What is the scenario to use pesticides by the farmers ?

3.4 SUMMARY

The term ‗green revolution‘ has been used in the context of a

significant breakthrough in the production of food grains,
mainly wheat and rice, in India since the decade of mid-1960s
by using new agricultural practices, gradually replacing the
traditional agricultural practices. Traditional agricultural
practices were characterised by the use of indigenous input such
as organic manures, seeds, simple plough and other agricultural
tools. The modern technology, on the other hand, consisted of
use of high yielding variety of seeds, chemical fertilizers,
pesticides, extensive irrigation, agricultural machinery, etc.
However, the achievements of Green Revolution were at the
expense of ecology and environment. Extensive dependence on
chemicals and pesticides has started showing its darker side.
The modern system of farming in India has resulted in decrease
in land fertility of late, damage to environment, chemical
contaminations etc. this is reflected in soil erosion, soil salinity,
soil contamination, genetic erosion etc.
The rapid agricultural progress in India is very necessary as to
cater lager number of populations. For rapid agricultural growth
it is necessary we use limited resource efficiently and optimum
way by use of technology. Progressive agriculture will demand
among other things (i.e. favourable institutional and
organisational structure), improvement in inputs and methods.
Irrigation, better seeds, better manures and fertilisers, land
reclamation and soil conservation, plant protection, use of
mechanisation etc. these are various aspects of agricultural
inputs which have to be use efficiently to achieve the goal of
food security.

51
 Sustainable Agricultural
3.5 QUESTIONS Development And Food
Security-I
1. What do you understand by Green Revolution and its
impact on agriculture productivity?
2. What are the main components of Green Revolution?
3. What are measures taken by the Government to improve
technology in input use efficiency?
References:
Indian Economy by Datt & Sundharam and Indian Economy by
Ramesh Singh

*****

52
 4
SUSTAINABLE AGRICULTURAL
DEVELOPMENT AND FOOD SECURITY-II
Unit Structure
4.0 Objectives
4.1 Introduction
4.2 Management and Strategies for Sustainable development in
Agriculture sector
4.3 Food Security – Concept, measurement, Magnitude
4.4 Critical evaluation of govt. Policies related to food security
4.5 Summary
4.6 Questions

4.0 OBJECTIVES

 To know the importance of Sustainable Agriculture

 To know the management and strategies of Govt. to develop
the sustainable agriculture
 To know the importance of food security in India
 To understand the govt. polices and its critical evaluations
for steps taking for food security in India.

4.1 INTRODUCTION

Sustainable development can be defined as, development at

present meets the needs of the present generation without
compromising the ability of future generation to meet their own
demand.
Sustainability in agriculture means the land and resources that
use for agriculture today should be handed over to the future
generations in a sustainable form so that they can continue to
practice agriculture and have food security. This means that we
have to use lands, water resources, etc. in such a manner that
the future generations will also be able to have sustainable
development.

53
Sustainable agriculture is the system of raising crops for greater Sustainable Agricultural
Development And Food
human utility through utilization of resources with better Security-II
efficiency without disturbing im-balancing or polluting the
environment. Sustainable agriculture is ecologically sound,
economically viable, socially just and human.
4.2 MANAGEMENT AND STRATEGIES FOR
SUSTAINABLE DEVELOPMENT IN AGRICULTURE
SECTOR

In order to make sustainable development in integral part of

every nation‟s development strategy, the United Nations
General Assembly, in September 2015, adopted the 2030
Agenda for Sustainable Development that includes 17
sustainable Development goals (SDGs), also called Global
goals.
As a signatory, to the Agenda 2030, India needs to develop its
vision, strategies and targets to achieve SDGs by effectively
making them as part of its policy. Thus, this chapter aims at
representing a vision and framework for realising the SDG – 2
which focuses upon ending hunger, achieving food security and
improved nutrition and promoting the sustainable agriculture.
Agriculture plays a vital role in guaranteeing food security
while also accounting for a significant share of India‟s Gross
Domestic Product (GDP). It provides employment to almost
two-thirds of the workforce in gainful employment. A large
number of industries such as sugar, textiles, jute, food and milk
processing etc. depend on agricultural production to meet their
requirement of raw materials. On account of its close
relationships with other economic sectors, agricultural growth
has a multiplier effect on the entire economy.
Presently, the danger of climate change poses a challenge for
sustainable agricultural growth. This danger is deepened due to
accumulated greenhouse gas emissions in the atmosphere,
anthropogenically generated through long-term intensive
industrial growth and high consumption lifestyles and
preferences. While the global community is collectively
engaging itself to deal with this danger, India needs to evolve a
national strategy for adapting to climate change and its
variabilities in order to ensure environmental sustainability in
its socio-economic developmental priorities.

54
Agricultural Development 4.2.1 Status of Agricultural Development in India:
and Policy
India is expected to be the most populated of the world by
2050. In order to meet the increasing needs of the growing
population, it is forced to produce more than 210 million tonnes
of food grains per year. India has not only met its national
requirement but is also exporting to other countries. It also has
a respectable cushion of stock of about 40 million tonnes of
food grains. The achievement of green revolution was due to
the upsurge in yields through the augmented use of high
yielding variety seeds. But rigorous use of land without taking
enough care to maintain its productive capacity leads to loss of
top soil due to erosion, loss of Organic matter, loss of porous
soil structure and water logging and build-up of toxic salts and
chemicals. Deficiencies in micro nutrients such as zinc, iron,
and manganese have also increased in Indian soil. Overuse of
pesticides has caused localized health hazards.
Indiscriminate use of modern agriculture technology may
endanger ecological security and imbalance the environment.
Both agriculturalists and government have made huge
investment on irrigation. These investments have not only
brought insufficient results but also the use of its inappropriate
management system has led to enormous water losses and
problems such as soil erosion and compaction, water salinity,
acidity and alkalinity. Though we have more than 100 million
holdings hardly 4 per cent of the total area is under pasture and
grasses. The area under forest cover, pasture and grazing land
has considerably declined substantially over the times. The
present social forestry programmes often have tended to be
government foresting for the people rather than people own
foresting for meeting their needs. Thus, Indian agriculture has
problems related to
(i) Sustainability viz. Promoted deterioration of renewable
resources and of environment and
(ii) Levelling of agricultural yield despite increasing doses of
new inputs and high yielding technology.
4.2.2 Meaning of Sustainable Agriculture:
Sustainable agriculture is farming in justifiable ways meeting
society's present food and textile needs, without
compromising the ability for current or future generations to
55
meet their needs. ... Developing maintainable food systems Sustainable Agricultural
Development And Food
backs to the sustainability of the human population. Security-II

Workable agricultural practices have to balance ecological

health and economic profitability in order to promote social and
economic equity. Therefore, both natural and human resources
have their own importance. In simple terminology, “Sustainable
Agriculture” includes the procedures that would allow us to
meet the current and long-term societal needs for food, fibre
and other resources, while maximising benefits through the
conservation of natural resources and maintenance of
ecosystem functions. The priority of promoting human
capabilities at the individual (farmer) level and ensuring food
security at the national level, through effective and equitable
use of resources are compatible with the concept of
“Sustainable Agriculture”.
Definition:
“Sustainable agriculture is the successful management of
resources for agriculture to satisfy changing human needs,
while maintaining or enhancing the quality of the environment
and conserving natural resources” CGIAR/TAC, 1988.
4.2.3 Management and Strategies for Sustainable
Development in Agriculture:
Sustainability as defined by International Fund for Agriculture
Development (IFAD) comes very close to explaining how to do
this. Sustainability here is seen as a process essential for
ensuring that the institutions supported through projects and the
benefits realized are maintained and continued even after the
completion of the developmental projects. It would be useful to
take cognizance of the following four sustainability elements
while devising the response for achieving the SDG-2 in Indian
context:
1. Institutional Sustainability: Establishment and nurturing of
functional institutions which are self –sustaining even after
the project ends.
2. Household and community resilience: Making communities
resilient so that they are readily able to anticipate and adapt
to changes through clear decision-making processes,

56
Agricultural Development collaboration and management of resources internal and
and Policy
external to them.
3. Environmental Sustainability: This must be integral to the
projects and overall developmental strategy as it has to
ensure that environmentally sustainable systems to maintain
a stable resource base avoid overexploitation or renewable
resources and preserve biodiversity.
4. Structural change: Given the context to poverty and hunger
in India, it is essential that the structural dimensions of
poverty specified to India are addressed through the
empowerment of poor and marginalized rural households.
Attaining sustainable agriculture will require internalizing all
the four sustainability elements discussed above. This shall not
only give them capacities but also ensure sustainability of the
natural resources and ecology of their area to ensure the
sustained growth.
There are some initiatives / programs / Schemes started by
Govt. to promote sustainable development in Agricultural
sector:
1. Pardhan mantri Krishi Sinchayee Yojana (PMKSY) :
Starts to achieve merging of investments in irrigation at the
field level, expand cultivable area under assured irrigation,
optimize on-farm water use to reduce wastage of water,
improve the adoption of precision irrigation and other water
saving technologies (more crop per drop), enhance recharge
of aquifers and introduce sustainable water conservation
practices by exploring the viability of reusing treated
municipal waste water for pre-urban agriculture and attract
greater private investment in precision irrigation system.
The main objective of scheme are as follows:
 Ensure water security to farm sector through Pradhan
Mantri Kirshi Sinchayee Yojana (PMKSY) and provide
water to Her Khet ko Pani.
 To provide a comprehensive solution in irrigation supply
chain.
 Use micro irrigation technologies widely to save water,
increase production and productivity of crops in a manner
and help in achieving food security.
57
 Guaranteed irrigation, enlarged use of micro irrigation Sustainable Agricultural
Development And Food
technologies will provide higher income to farmers, Security-II
ushering in much needed prosperity in rural areas.
Broad Strategy:
 As water scarcity is being felt, micro irrigation technologies
will be promoted extensively in all crops.
 As far as possible these technologies will be made only
method of irrigating plants over time.
 As a short time measure this strategy will be used in water
stressed blocks only.
 Special focus will be on use of micro irrigation technologies
in water guzzling crops like sugarcane, banana, cotton etc.
in arid and semi-arid parts of the countries. To achieve this
end, suitable measures such as publicity campaigns, policy
provisions and sharing of responsibilities with companies
etc. will be initiated.
 The target of field crops, which is presently 25%, will be
increased to 50% for bringing them under micro irrigation
technologies.
2. Rashtriya Krishi Vikas Yojana (RKVY): RKVY aims at:
1) Holistic development of agriculture and allied sectors by
incentivizing the states to increase public investment in this
sector.
2) Providing optimum flexibility and autonomy to states in
planning and executing projects.
3) Building robust infrastructure and creating assets for filling
identified gaps.
4) Enabling central government to launch strategic initiatives
from time to time reflecting national priorities.
5) Maximising returns to the farmers in agriculture and allied
sectors.
3. National Food Security Mission (NSFM): It is an
initiative directed at achieving the targets under SDG-2.
This is supposed to be a Centrally Sponsored Scheme with
58
Agricultural Development an objective to „End poverty, achieve food security and
and Policy
improved nutrition and promote sustainable agriculture‟.
4. The National Mission for Sustainable Agriculture
(NMSA): Which is one of the nine missions under the
National Action Plan on Climate Change (NAPCC) Seeks
to address issues regarding „Sustainable Agriculture‟ in the
context of risks associated with climate change by devising
appropriate adaption and mitigation strategies for ensuring
food security, equitable access to food resources, enhancing
livelihood opportunities and conducive to economic
steadiness at the national level.
5. Rain-fed Area Development (RAD) under National
Mission on Sustainable Agriculture (NMSA): To make
rain-fed agriculture more productive, sustainable, and
remunerative and climate resilient by promoting location
specific Integrated or Composite Farming Systems along
with preservation of national resources through appropriate
soil and moisture protection measures.
6. Sub-Mission on Agro-forestry (SMAF): Aims at
promoting agro forestry through trees and crops that
respond to local priorities and agro-climatic/ biophysical
conditions, adoption of suitable management practices and
integration of those practices into rural livelihood systems.
The new concepts of landscapes approach come across as a
practical way to achieve justification, adaptation and
agricultural production objectives while ensuring
environment sustainability.
7. National Horticulture Mission: It was launched in the
year 2005-06 as a Centrally Sponsored Scheme to promote
a holistic growth of the horticultural sector through an area
based regionally differentiated strategies. The schemed has
been subsumed as a part of mission for Integration
Development of Horticulture during 2014-15. Presently,
India is the 2nd largest producer of foods and vegetables in
the world.
8. National Horticulture Board: Aims at improving
integrated development of Horticulture industry and to help
in coordinating, sustaining the production and processing of
fruits and vegetables.

59
9. Soil Health Management (SHM): Aims at promoting Sustainable Agricultural
Development And Food
location as well as crop specific justifiable soil health Security-II
administration including waste management, organic
farming practice by way of creating and linking soil fertility
maps with macro-micro nutrient management, appropriate
land use based on land type, judicious application of
fertilizers and minimizing soil erosion through following
initiatives:
A. Paramparagat Krishi Vikas Yojana (PKVY): Under the
scheme organic farming is promoted through farmer‟s
group centric certification system known as „PGS
Certification‟ in cluster approach. The area envisaged to be
covered under PKVY will be about 2 lakhs by end of the
12th Plan.
B. Organic Value Chain Development for North Eastern
Region: The scheme is for implementation in the all the
states of NE region. The main purpose of the scheme is
promotion of certified organic production in a value chain
mode to link cultivators with consumers and to support the
development of entire value chain starting from inputs,
seeds, certification, to the creation of facilities for gathering,
accumulation, processing marketing and brand building
initiative.
C. Soil Health Card Scheme: A centrally sponsored “Soil
Health Card” has been made operational from the year
2014-15 to ensure balanced/ efficient use of fertilizer, based
on soil tests and targeted to provide soil health cards to all
farmers in the country once in every 2 years.
10. National Mission on Agricultural Extension and
Technology (NMAET): It encompasses extension, ICT,
seeds, Agricultural Mechanization and plant Protection aims
to restructure and strengthen agricultural extension to
enable delivery of appropriate technology and improved
agronomic practices to the farmers through interactive
methods of information dissemination, use of ICT including
short messaging service (SMSs), Farmer‟s portal & other
web based applications, capacity building & institutional
strengthening. Public-Private partnership is being
encouraged in the Extension and Training components of
the Mission. Recognized NGOs, para-extension workforces,
60
Agricultural Development Farmers Organisations, dealers and agripreneurs etc. are
and Policy
stimulated to contribute and provide extension and training
services and guidance to farmers to improve agricultural
production and productivity.
11. Rashtriya Gokul Mission: Executed by DADF to
encourage indigenous breeds having exclusive
characteristics of heat tolerance, tick and pest resistance,
resistance to diseases and the ability to thrive under extreme
climate conditions.
12. Government of India adopted a mega project called the
National Initiative on Climate Resilient Agriculture
(NICRA). Its four main components include Natural
Resource Management, improving crop production,
livestock and fisheries and institutional interferences.
4.2.4 Measures for Sustainable Agriculture:
While government has several initiatives/schemes/programmes
to optimize the production of various crops and food item but in
the absence of sustainability mechanism in place, they do not
yield the desired results.
Hence, here we suggest some measures for sustainable
agriculture. Some of them are:
A Sustainable Agricultural Practices:
 Optimising the Irrigation Potential and Water use
efficiency: Increasing the irrigation potential through
effective demand and supply side management of water and
efficient use of water
 Integrated Nutrient Management (INM) / Bio-fertilisers /
Organic Farming / Mechanisation and Technology
 Integrated Pest Management
 Improved Farm Practices / Crop diversification
 Conserving Indigenous Genetic Resources / Conserving
Agricultural Heritage / ITK
 Agroforestry

61
 Promotion of climate resilient practice and conserving Sustainable Agricultural
Development And Food
Agro-biodiversity through in-situ & ex-situ measures, Security-II
increase nutritional value etc.
 Forward-Backward linkages
 Cold storage chain
 Warehouses
Supply Chain Management and Sustainability as umbrella
concepts for making agriculture sustainable and an instrument
of rural transformation as discussed in earlier sections.
Establishing as an attractive viable profession.
Linking knowledge with practices.
Establishment and nurturing of FO/CBOs/NGOs- extension
workers as local institutions for rural transformation.
Cutting edge knowledge on Farming and Agricultural Supply
Chains: A constant dialogue among multiple stakeholder:
ICAR, Agriculture University/ Research centres and
Farmers/FO/CBOs/NGOs- extension workers.
Peri-urban Agriculture: Demographic and economic expansion
of cities, through processes such as migration and
industrialization, trend to be accompanied by spatial expansion,
resulting in encroachments by cities upon adjacent peri-urban
areas. At the same time, areas that were earlier distant from the
city and rural in character will be subsequently started falling
within the cities reach. Typically, increased interactions with
and access to the city economy, in terms of capital, labour
goods and services will subsequently trigger the transformation
of rural people to peri- urban areas. The rural-peri-urban-urban
range itself is thus dynamic in nature and the changes will be
more marked around cities that are rapidly urbanizing or
growing both economically and spatially, as compared to the
slower- growing or stagnant urban cores.
4.2.5 Conclusions:
Science and Technology shall be integrated in agriculture in
their entirety and also in all other related departments to make
them more relevant and competitive with the rest of the world.

62
Agricultural Development IT enabled digital infrastructure for dynamic exchange of
and Policy
information is the driving force that can not only play an
instrumental role in making agriculture sustainable but also
transform the way India manages its natural resources well
integrated with the governance system and also address the
challenges posed by climatic changes.
Check Progress:
1. What are you understand by Sustainable Agriculture?
2. Explain in brief management and Strategies for Sustainable
Development in Agriculture.
3. Write the name of schemes started by Govt. to promote
sustainable development in Agricultural sector.
4. Explain the measures for Sustainable Agriculture.

4.3 FOOD SECURITY – CONCEPT, MEASUREMENT,

MAGNITUDE

Food security is one of the major concerns of human beings

especially in the developing countries where most people are
unable to get suitable nutrition. In India, food security is a key
issue; where nearly one-third of its total population is unable to
survive at their own expense, and half of the Indian children are
undernourished from at least the past three decades. Actually,
the word „Food Security‟ came into light in the 1960s and
1970s in international development related works, when
Malthusian theory, recognized as the best theory of its kind,
stated that, “If human population grows geometrically, food
production grows with an arithmetic progression.” As a
concept, „food security‟ originated in 1974, when World Food
Summit, defined food security as an “Availability at all times of
adequate world- food stuff to sustain a steady expansion of food
consumption and to offset fluctuation in production and prices.
Given the importance of rural India and linkages of agriculture
with multiple facets of SDG – 2, sustainability of agriculture
becomes central concern within the overall strategy to end
hunger, improve nutrition and achieving the food security.

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4.3.1 Concept of Food Security: Sustainable Agricultural
Development And Food
Security-II
World Development Report (1986) defined food security as
“access by all people at all times to enough food for an active,
healthy life.”
Food and Agriculture Organisation (FAO, 1983) defined food
security is “ensuring that all people at all times have both
physical and economic access to basic food they need.”
Staatz (1990) defined food security as “the ability to assure, on
a long-term basis, that the food system provides the total
population access to a timely, reliable and nutritionally
adequate supply of food.”
In 1996, World Food Summit stated that “Food security exists
when all people, at all times, have physical and economic
access to sufficient, safe and nutritious food that meets their
dietary needs and preferences for an active and healthy life.”
FAO again refined the definition of food security in „The state
of food insecurity in the world 2001‟ and stated that “Food
Security is a situation that exists when all people, at all times,
have physical social and economic access to sufficient, safe and
nutritious food that meets their dietary needs and food
preferences for an active and healthy life.”
From these definitions, the following points emerge:
1. Food security involves suitable physical accessibility of
food to the entire population in a country.
2. People have enough buying power so that they can acquire
the food they need.
3. For healthy life, the food accessible should be adequate in
quality as well as quantity to meet nutritional requirements.
4. A nation may obtain self-sufficiency in food at a point of
time, but the concept of food security necessities that,
timely, reliable and nutritionally sufficient supply of food
should be available on a long-term basis. This implies that a
nation has to guarantee the growth rate in food supply so
that it takes care of the increase in population as also the
increase in demand resulting from increase in the income of
the people.

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Agricultural Development From this viewpoint, the following stages of food security may
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be visualised for a developing country like India:
Stage 1: The most basic need from the standpoint of human
survival is to make an adequate quantity of cereals available to
all.
Stage 2: In the second stage, we may think of food security as
the sufficient availability of cereals and pulses.
Stage 3: In the third stage, food security should comprise of
cereals, pulses, milk and milk products.
Stage 4: In the fourth stage, food security should include
cereals, pulses, milk and milk products, vegetables and fruits,
fish, eggs and meat.
4.3.2 Food Security – Measurement:
Food security is a multi-faceted idea that involves a whole
range of different factors such as social disparities and
ecologically sustainable food systems. In the definition of food
security, availability of the food is the core component. Food
security comprises of the four bases; availability, physical and
economic access, utilization and stability. To find appropriate
indicators to measure food security have been tough. Chronic
malnutrition has been the main indicator comprising estimates
based on average availability of calories per person at national
level. Giving credit to a certain parameter, program or scheme
is another challenge; the degree to which improvements in the
food security situation can be attributed to the outcome and
results of particular policies, programs and actions
Ever since mid-1960s when the import dependence for cereals
had gone up by 16% food security, both at the national and
household levels, has been the focus of agricultural
development in India. Maximizing the production of cereals
was the main aim of the new approach and involved building a
foundation of food security on three key elements including
provision of an improved agricultural technology offer to the
farmers, delivery of contemporary farm inputs, technical
knowledge and institutional credit to the farmer. The
performance of agriculture, however, has not been acceptable.
The share of agriculture in the Gross Domestic Product (GDP)
has registered a steady decline from 36.4 per cent in 1982-83 to

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13.7 per cent in 2015-16. But agricultural sector still supports Sustainable Agricultural
Development And Food
more than 50 crore people providing employment to 52 per cent Security-II
of the workforce.
Cultivation area in rural India is getting reduced mainly due to
expansion of non-agricultural businesses and urbanization.
However, through increasing productivity by growing High
Yielding Varieties Product (HYVP), India is food secure. The
food grain production in India rose from 50.82 million tonnes in
1950-51 to more than 260 million tonnes at present showing a
remarkable growth in production level of more than 400% over
a 7-decade period. But food security has to be scrutinized in
terms of vulnerability, utilization, accessibility and most
importantly availability. Therefore, apart from production
programs and policies relating to distribution, buffer stocking,
and monitoring prices become important.
The following are the steps to be taken for achieving food
security for growing population through higher food
production:
1. Education and literacy: Education plays a very important
role in improving farm efficiency and technology adoption.
Farmers nowadays need information on wide range of
topics to acquire knowledge or upgrade their skills this has
become necessary as agriculture changed from subsistence
level to commercial level. With change in technology, use
of machines and modern inputs like fertilizers literacy has
become very important for farmers.
It becomes easier for an educated workforce to train itself
and thus acquire new skills and technologies thereby
leading to a growth in the productivity. Thus, literacy plays
an important role in substantially increasing the yield
growth and domestic supply of food.
2. Crop diversification: Food availability is a primary
condition for food security. India is now almost self-
sufficient in cereals but faces a shortfall in pulses and
oilseeds. It is mainly due to the changes in consumption
patterns, demand for products like fruits, vegetables, dairy,
meat, poultry, and fishery products has been increasing.
There is a need for a rise in crop diversification and

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Agricultural Development improve associated activities to produce such crops and
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produces in which we are deficient.
3. Tackling climate change: Food security in India can be
achieved by paying more attention to issues such as climatic
change, limiting global warming, including the promotion
of climate-smart agricultural production techniques and
land use policies at a scale to help adapt and ease ill effects
of climate change
4. Integrated water management: India needs to produce
more crops per unit of land and water resources. Shocking
rates of groundwater reductions and growing ecological and
social problems pose serious threats to mankind. Better
management of irrigation water is vital in enhancing
production and productivity, food security and poverty
alleviation. Agriculture is the biggest user of water
accounting for over 80 per cent of the water withdrawals.
There are burdens for diverting water from agriculture to
other sectors. It has been projected that availability of water
for agriculture use in India may be reduced by 21 per cent
by 2020, resulting in drop of yields, especially rice, leading
to price increase and danger to food security of the poor.
The requirements of other sectors for water cannot be
overlooked. As a result, it is essential that an integrated
water use policy is framed and carefully implemented.
Modern procedures of irrigation like sprinkler, drip
irrigation, fertigation, among other water efficient tools
need to be adopted on larger scale.
5. Integrated nutrient management: A proper attention
needs to be given to balanced use of nutrients. Phosphorus
deficiency is the most widespread soil fertility problem in
both irrigated and non-irrigated rain fed areas. To improve
the effectiveness of fertilizer-use, what really required is
improved location-specific research on efficient fertilizer
practices, improvement in soil testing services, development
of improved fertilizer supply and distribution systems and
expansion of physical and institutional infrastructure.
6. Improved varieties: In numerous regions, farmers are not
able to get data about the availability of new and improved
varieties and some are not having access to quality seeds of
these varieties, resulting in lesser yields. This situation has

67
 to be amended by developing a national-level network to Sustainable Agricultural
Development And Food
monitor and coordinate the activities with the various State Security-II
government functionaries working in the area of crop
production.
7. Improved technology adoption: Acceptance of
technologies like integrated nutrient management,
integrated pest management and integrated weed
management need to be made available for adoption to
ensure higher production and sustainability of production
base.
8. Awareness on population growth: The awareness of the
burdens of increasing population growth and consumption
patterns on environment functioning should be created to
sensitize farmers on adoption of sustainable crop cultivation
and management practices.
9. Focus on small farmers: Rise in food production in the
nation does not necessarily ensure food security, if the poor
do not have the buying power. Therefore, contribution of
small farmers in food production is vital to achieve food
security. Most of them being uneducated and having failed
earlier either in accepting new technologies or repaying the
loan provided under various development schemes. They
need backing not only to secure inputs but also to gain
confidence.
The strategy to increase the food production should address
the problems of such small landholding farmers, who
constitute over 83 per cent of farmers in the country. Their
land holding is less than two hectare of land per family,
mostly marginal and non-irrigated. They have been working
low-external input farming and the crop yields have been
substantially low. However, their contribution to the
national food production is substantial and meets a
significant part of their food needs.
10. Agricultural research education: The agrarian education
in India is facing one of the biggest tests. It has to recognize
its role in preparing the human resources for improved
agricultural productivity and sustainable use of natural
resources. Agricultural colleges and universities were
initially allotted to spread scientific knowledge and skills to

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Agricultural Development the agricultural community and to train them to use such
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skills for better output. As a backup for such a mission,
agricultural research was stimulated to emphasis on
scientific knowledge to suit to the realities of rural societies.
However, these ingenuities could not keep pace with the fast
changing scientific and technical enhancements and gradually
failed in their objective to promote the most modern skills and
attitudes to both agricultural students and farmers. Therefore,
updating of the curricula of agricultural education has become
imperative. This is very much applicable to research, teaching,
and extension functions of the university as they form the inter-
related, theoretical and practical basis of modern agricultural
education in India.
4.3.3 Dimensions and Magnitude of Food Security:
In view of the above definition, we can say that, food
security is a three-dimensional concept, whose mechanism is
like prism and it has four gears (availability, approach,
allocation, absorption) which are controlling the food
security mechanism.
 Availability: Adequate food stock to fulfil the public
demand is a essential condition for food security and
without adequate stock we cannot approach this stage. From
our country‟s perspective, India is now self-sufficient in
food grain production. Food grain output in 1950-51 was
about 50 million tonnes, while for 2013-14, India is likely
to have an output of 264.38 million tonnes of food grains.
(Table 2.1). But the growth rate of food grain production is
slower than the population growth, and growth rate of food
grain production has also declined in recent decades.
However, we have buffer stock of food grain which is one
necessary condition for food security.
 Approach: About one third population of our country is
extremely poor and the UN Million Development goals
Report 2014, India also has the highest number of less than
five years age group deaths in the world in 2012, with 1.4
million children dying before reaching their fifth birthday.
On one hand, we are pleased that our country has bumper
food grain stock but, on another hand, it is a bitter truth that
most people have to sleep at night with an empty stomach.
It so happens because of a incorrect policy of distribution of
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 food grain. Distribution of food must be in the view of the Sustainable Agricultural
Development And Food
required provisions. Only then every person will get the Security-II
right benefits of food security.
 Absorption: It is the process by which people become
skilled to get adequate food for survival with certain ease.
In other words, absorption is the real scale by which we can
know about the food security‟s authenticity. Many needy
people have RATION CARD or LAL CARD and they get
their food right from the Public Distribution System. But
question is, do they really take this food for themselves or
do they sell the grain received for other needs? Secondly, do
they really get healthy and adequate food grain under the
food security plan? Replies of these questions must be
positive then only the public will find real food security.
Food absorption level in India is in the lowest point. About
44% of children are under-weight and about half of the
pregnant women are suffering from anaemia due to low
food absorption.
The extents of food security prism are -„Maintainable mutual
collaboration‟, „governmental enthusiasm for food security‟ and
„distributional precision of food‟. Food security gives us a ray
of assurance for better feasibility and this is the sum of seven
different rays which are passing through three-dimensional food
security. These seven rays are as follows:
 All time adequate food accessibility for all people.
 Consumption follows moral and ethical values
 Ensured food acquire
 Distribution and production follow the nature for
sustainability
 Personally, and culturally acceptable
 Get food with human dignity
 Nutritionally adequate
Food security is attained when „when food is available to all
people at all times and they have physical and economic access
to food that is sufficient to meet dietary needs for a healthy and
productive life‟. In this sense, achievement of food security

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Agricultural Development infers producing (or importing) sufficient food and making it
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available to all individuals throughout the year and on a
sustainable basis from year to year. Further, satisfying dietary
needs for a productive and healthy life suggests physical and
economic access of all people to nutritive food, according to
each individual‟s condition. Food security thus means freedom
from starvation and undernourishment.
The position of food security of a country needs to be assessed
at three levels:
1. First is the availability of food at national level on
sustainable basis, which depends on level and growth of
food production, or adequate capacity to import food (if
availability elsewhere is assured).
2. Second is the physical and economic access of all
households to food. Physical access requires efficient
marketing, transport, and storage system to carry the food
within an easy reach or at a reasonable distance from human
settlements (villages). Economic access of every family to
food depends on its purchasing power and prices of food at
which it is available.
3. And third is the utilization of available food by individuals,
which depends on intra-family allocation of food, and
maintenance of reasonable level of health of all individuals
to consume and absorb required level of food. Societal
factors like education, primary healthcare, gender bias, and
role of women in household decisions affect food security at
the individual level.
It is in this background that India tackled the hunger and food-
insecurity situation through both long-term and short-term
measures. As a part of long-term strategy, it adopted a
development strategy encompassing maintenance of adequate
growth of national food production, and employment and
incomes of masses, improvement in marketing infrastructure
and access to education and primary healthcare. These apart,
the short-term plan involved selective market interference and
targeted distribution of sponsored food to reduce hunger and
food insecurity. Further, as the nutritive status is also prejudiced
by non-food factors such as clean water and sanitation, it was
recognised that attention to these aspects will help translate
food security into good nutrition.
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I. Food security and Nutritional Security in India: Sustainable Agricultural
Development And Food
Security-II
In India, a main share of the population suffers from
undernourishment despite the fact that India became self-
sufficient in food grain production two decades after freedom.
Food grain production in the country increased from 176.39
million tonnes in 1990-91 to 284.95 million tonnes in 2018-19.
However, it is important to recognise that self-sufficiency in
food production and having enough food available per person
for the country is not the only condition to achieve food
security; households must also have access to available food to
achieve adequate nutrients intakes. Availability and
affordability of nutritious diet is crucial to reduce the burden of
malnutrition.
Historically, food security in India was always synonymous
with food grain security. The per capita accessibility of food
grains has reduced from 186.2 kg/year in 1991-92 to 180.3
kg/year in 2018-19(P). This reduction in the cereal accessibility
has been associated with a marked increase in the availability of
pulses, eggs and dairy and a marginal increase in per capita
availability of sugar and edible oil (Figure 9). This changing
trend in per capita food availability reflects significant changes
in the Indian food basket, away from staple food grains towards
high-value horticultural and animal products (Kumar et al.,
2007; Mittal, 2007).
Over time, the consumption of cereals (particularly coarse
cereals) has declined whereas the consumption of milk, eggs,
fruits, vegetables, etc., has increased (Kumar, 2016). In India,
there has been a clear growth in calories and proteins from non-
cereal items in both rural and urban areas (Table 3). The
proportion of household expenditure on cereals has also
registered a decline from 18 per cent and 10.1 per cent in 2004-
05 to 10.7 per cent India and 6.6 per cent in 2011-12 in rural
and urban India respectively (NSSO, 2004-05 and 2011-12).
Diet diversification towards animal and dairy products has a
positive effect on nutrition, particularly in terms of the
micronutrient content in food; however, increasing
consumption of edible oil and sugar may lead to double burden
of malnutrition.

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Agricultural Development
and Policy

Source: Achieving Nutritional Security in India Vision 2030

Table 1: Percentage Break-Up of Calorie and Protein Intake by

Food Group: 1993-94 to 2011-12
Calories (kcal) Protein (gm)
Year Rural Urban Rural Urban
Cereal Non Cereal Non Cereal Non Cereal Non
cereal cereal cereal Cereal
1993- 71.03 28.97 58.53 41.47 69.42 30.58 59.41 40.59
94
1999- 67.55 32.45 55.05 44.96 67.43 32.57 57.03 42.97
00

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2004- 67.54 32.46 56.08 43.92 66.37 33.63 56.16 43.84 Sustainable Agricultural
05 Development And Food
2009- 64.16 35.85 55.01 44.97 64.87 35.13 56.39 43.61 Security-II
10
2011- 57.40 42.60 48.00 52.00 58.00 42.00 49.00 51.00
12
Source: NSS Report No.540, Nutritional Intake in India

II. Food Availability and Affordability:

One of the linkages between food availability and nutrition
comes from the fact that increased availability leads to
affordability. Increase in agricultural productivity and a relative
reduction in food prices enable increased intake of fruits,
vegetables, pulses and animal products, which has a significant
impact on reducing micronutrients deficiencies. Food prices are
important from the nutritional perspective as they have
significant implications in terms of access to food and food
choices. Food accounts for a large chunk of total expenditure in
households with low income and a decline in relative food
prices is likely to increase consumption and release purchasing
power for other commodities (Figure 2). However, an increase
in relative food prices adversely affects food security and
affordability, and worsens the incidence of hunger.
Figure 2: Percentage Share of Expenditure on Food and
Non-food Items among Poorest (bottom 30 per cent
Monthly Per Capita Expenditure Classes), 2004-05 to 2011-
12

Source: adapted from Food and Nutrition Security Analysis, India (2019)
by MOPSI and WFP, GOI, pp 75 (Calculation based on CES, NSSO 61st
and 68th rounds)

The Consumption Expenditure Survey (CES) of the NSSO

gathers information on the obtainability of two square meals a
day, which can be used to measure the incidence of hunger.
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Agricultural Development Overall, the incidence of hunger has declined from 4.45 per
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cent in 1993-94 to 1.26 per cent in 2011-1214 (Figure 3). The
occurrence of hunger in the states of Odisha and West Bengal,
which was more than 10 per cent in 1993-94, has reduced to
1.28 per cent and 1.16 per cent in 2011- 12. The north-eastern
states of Assam, Arunachal Pradesh and Manipur have almost
eliminated the occurrence of hunger. Against this, there has
been an rise in the rate of hunger in Punjab (from 0.12 per cent
in 1993-94 to 1.43 per cent in 2011-12), in Himachal Pradesh
(0.28 per cent in 1993-94 to 1.51 per cent in 2011-12), in Delhi
(from 0.44 per cent in 1993-94 to 0.74 per cent in 2011-12) and
in Haryana (from 0.56 per cent in 1993-94 to 1.19 per cent in
2011-12).
However, these numbers need to be interpreted with caution
because the question asked differed between the 50th and 68th
rounds. However, there is little doubt that there has been a
noteworthy decline in the occurrence of hunger across states.

Source: Calculated by Author from NSS 50th and 68th round. Note:
Incidence of hunger is measured by persons reporting not getting two
square meals a day.

Despite the marked shift away from the consumption of cereals

to non-cereals, the focus of agricultural policies has been on the
production of staples, primarily rice and wheat, leading to
dietary imbalance. The question that rises is what ways can be
used to achieve diet variation and nutritional security in India.
III. Food Grain Security to Diet Diversification:
Various food-based welfare programmes have been
implemented by the government over the years to reduce the
level of hunger and under-nutrition in the country. These
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include the midday meal (MDM) scheme, the anganwadi Sustainable Agricultural
Development And Food
system under the Integrated Child Development Scheme Security-II
(ICDS) to provide rations to pregnant and lactating women and
subsidised food grains for those living in absolute poverty
through the public distribution system (PDS). Additionally, the
National Food security Act (2013) was passed to ensure food
and nutritive security through associated programs and
schemes. However, these food distribution programmes mainly
focus on providing satisfactory calories rather than
nourishment, and has been termed “calories fundamentalism”.
A substantial portion of the Indian population suffer from the
problem of hidden hunger (chronic micronutrient deficiency)
where a person may have access to sufficient calories but lacks
adequate micronutrients.
It is a matter of concern that strategies that contribute to a diet
rich in micro-macronutrients have been ignored, resulting in
continuance of micronutrient deficiencies. Food-based
interventions are unlikely to result in a significant reduction in
undernourishment if they are not nourishment sensitive.
Moreover, a clear synergy is essential between agricultural
policies and the nutritional quality of food supply. An
innovative way to guarantee accessibility of micro-nutrients in
areas affected by chronic undernourishment is to adopt the
technique of bio-fortification, which involves incorporating
nutrients into the seeds of major food grains to improve the
micro-nutrient consumption among populations that are
regularly malnourished. There are numerous instances of this
having been executed effectively in different countries. For
example, orange-fleshed sweet potato in Mozambique has
resulted in increased serum retinol in children below five years
of age. WHO has also recommended fortification of rice with
iron to improve the iron status of the population where rice is a
staple food and wheat flour with folic acid to increase the intake
of folate by women? The Harvest-Plus programme of the
Consultative Group on International Agricultural Research has
been working on improving the nutritional status of pre-school
children and women of reproductive age by releasing iron and
zinc bio-fortified pearl millet, zinc-bio fortified rice and wheat;
iron bio-fortified beans and vitamin-A rich yellow cassava and
orange maize in 30 countries. In India, the Harvest-Plus
program has been endorsing iron stimulated pearl millet and
zinc-stimulated wheat to improve nutrition and public health.
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Agricultural Development Bio-fortification, however, is a short- or medium-term measure
and Policy
but not a long-term measure to reduce under-nutrition among
low income households; in the long term, the objective should
be to work towards guaranteeing access to an energy and
micronutrient rich varied diet.
Conclusion:
There is a need to check the rising food subsidy. Two steps
need to be taken in this regard firstly, taking timely decision as
how to dispose the surplus food-grain stock of FCI (which often
crosses the buffer norms) and secondly, reviewing the prices of
wheat and rice for the NFSA recipients (the rates have not been
revised since the Act commenced in July, 2013).

4.4 CRITICAL EVALUATION OF GOVT. POLICIES

RELATED TO FOOD SECURITY

With nearly 195 million malnourished people, India shares 25

percent of the global hunger burden. Nearly 47 million or 40
percent of the children in India are not meeting their full human
potential because of long-lasting under nutrition or stunting.
Stunting results in diminished learning capacity, poor school
performance, reduced incomes and increased risks of chronic
diseases. The impacts are passed on from one generation to
another as undernourished girls and women often give birth to
low birth-weight infants. There has also been an increase in the
occurrence of overweight and obesity in children and
youngsters in India, which has life-long consequences of non-
communicable diseases in adulthood.
The government administration has huge food security and anti-
poverty schemes but there are serious gaps in terms of addition
and exclusion errors. Women and girls are particularly
deprived. Notwithstanding the success of national food
independence, new tasks have emerged: Slowing cultivation
growth, climate change, land deprivation and shrinking bio-
diversity. Large areas of farmlands in India have become
infertile due to imbalanced fertiliser use and excessive use of a
single fertiliser, urea.
4.4.1 Government of India Programmes and Initiatives:
Today, India has been self-sufficient in food production but
food insecurity still stands in the middle of the way of our

77
developmental goal. This is in the form of seasonal outage of Sustainable Agricultural
Development And Food
adequate food in remote and isolated areas, not accessible due Security-II
to unemployment, insufficient economic condition for ensuring
healthy and appropriate food, due to weather condition and
many more. Under nutrition and malnourishment also show the
situation of food insecurity as these are the main cause of
micronutrient (hidden hunger). Most important task of our
government is making sure of nutrition for public health and
providing sustainable human development. At the earlier time
of our democracy, India had many major problems, such as low
agrarian output, too much nutritional problems, many economic
related natural disasters, lack of infrastructure, inappropriate
food distribution system, chronic energy deficiency etc. Now
in these days, many socio-economic related national problems
have been resolved or are on the verge of being resolved. But
one of them still stands over top of the list and worries us. And
that is – “Chronic Energy Deficiency”. Actually, it is the
synonym for food insecurity including development issues.
Chronic energy deficiency is rooted in India due to low dietary
habits, poor utilization of available facilities and high
prevalence of health-related problems. Government of India is
well conscious of this problem. To sort out this big issue,
government of India is working on these following points
continuously since the last five decades:
Building buffer stocks of food production:
❖ Improving public distribution system
❖ Materialization household food security programme

❖ Antyodya Anna Yojna (AAY)

❖ Food supplementation of the vulnerable groups- integrated
child development service (ICDS), Mid-Day Meals Scheme
(MDMs)
❖ Nutrition education especially through Food and Nutrition
Board (FNB) and ICDS
❖ Annapurna

❖ Mahatma Gandhi National Rural Employment Guarantee

Programme (MGNREGP)

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Agricultural Development ❖ National Old Age Pension scheme (NOAPs)
and Policy

❖ The national Maternity Benefit Scheme (NMBS)

❖ The National Family Benefit Scheme (NFBS)

❖ Efforts of the health sector to tackle adverse health

consequences of under nutrition; adverse effects of infection
and unwanted fertility on the nutritional status;
micronutrient deficiencies and their health consequences.
❖ The „Right to Food‟ campaigning and

❖ The „National Food Security Act. 2013‟

With a five-fold increase in food grain production from 50
million tonnes in 1950-51 to about 250 million tonnes in 2014-
15, India has moved away from dependence on food aid to
become a net food exporter. In 2016, the government launched
a number of programmes to double farmers‟ incomes by 2022.
These seek to remove bottlenecks for greater agricultural
productivity, especially in rain-fed areas. They include:
the National Food Security Mission, Rashtriya Krishi Vikas
Yojana (RKVY), the Integrated Schemes on Oilseeds, Pulses,
Palm oil and Maize (ISOPOM), Pradhan Mantri Fasal Bima
Yojana, the e-marketplace, as well as a massive irrigation and
soil and water harvesting programme to increase the country‟s
gross irrigated area from 90 million hectares to 103 million
hectares by 2017.
The government has also taken significant steps to combat
under- and malnutrition over the past two decades, such as
through the introduction of mid-day meals at
schools, anganwadi systems to provide rations to pregnant and
lactating mothers, and subsidised grain for those living below
the poverty line through a public distribution system.
The National Food Security Act (NFSA), 2013, aims to ensure
food and nutrition security for the most vulnerable through its
associated schemes and programmes, making access to food a
legal right. Recent Government Initiatives:
1. National Food Security Mission:
 It is a Central Government Sponsored Scheme launched in
2007.

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 National Food Security Mission aims for growth in Sustainable Agricultural
Development And Food
production of pulses, wheat, rice, coarse cereals and Security-II
commercial crops, through area expansion and productivity
enhancement.
 It works toward reinstating soil fertility and productivity at
the individual farm level and enhancing farm level
economy.
 It further aims to enhance the availability of vegetable oils
and to reduce the import of edible oils.
2. Rashtriya Krishi Vikas Yojana (RKVY):
 This scheme was initiated in 2007, and allowed states to
choose their own agriculture and allied sector development
activities as per the district/state agriculture plan.
 Rashtriya Krishi Vikas Yojana was transformed into a
Central Government Sponsored Scheme in 2014-15 also
with 100% central assistance.
 Rashtriya Krishi Vikas Yojana (RKVY) has been named as
Rashtriya Krishi Vikas Yojana- Remunerative Approaches
for Agriculture and Allied Sector Rejuvenation (RKVY-
RAFTAAR) for three years i.e. from 2017-18 to 2019-20.
 The main objectives of this yojana: Making farming a
lucrative economic activity through strengthening the
farmer‟s effort, risk justification and promoting agri-
business entrepreneurship. The main focus of this yojana is
on pre & post-harvest infrastructure, besides promoting
agri-entrepreneurship and innovations.
3. Integrated Scheme of Scheme of Oilseeds, Pulses, Maize
and Oilplam (ISOPOM):
The Department of Agriculture & Cooperation has been
implementing the following Centrally Sponsored Schemes
under TMOP&M for increasing production of oilseeds, pulses,
maize and oil palm in the country:
i. Oilseeds Production Programme (OPP)
ii. National Pulses Development Project (NPDP)
iii. Accelerated Maize Development Programme (AMDP)
80
Agricultural Development iv. Oil Palm Development Programme (OPDP)
and Policy
To provide flexibility to the States in implementation of these
programmes based on regionally differentiated approach, to
endorse crop diversification to provide focused approach to the
programmes and in view of the recommendations of the
Planning Commission the above four schemes have been
altered and amalgamated into one Centrally Sponsored
Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize
(ISOPOM) during the 10th Five Year Plan. The Integrated
Scheme of Oilseeds, Pulses, Oil Palm and Maize (ISOPOM)
will be implemented from 2004-05.
4. Pradhan Mantri Fasal Bima Yojana (PMFBY):
 The Pradhan Mantri Fasal Bima Yojana was launched on
18th February 2016.
 The scheme is being administered by the Ministry of
Agriculture and Farmers Welfare.
 It provides a comprehensive insurance cover against failure
of the crop thus helping in stabilising the income of the
farmers.
 The Scheme covers all food & oilseed crops and annual
commercial/horticultural crops for which past yield data is
available and for which the requisite number of Crop
Cutting Experiments (CCEs) are being conducted under the
General Crop Estimation Survey (GCES).
 The prescribed premium is 2% to be paid by farmers for
all Kharif crops and 1.5% for all rabi crops. In the case of
annual commercial and horticultural crops, the premium
is 5%.
 On paper, there is no upper limit on subsidy by the
government, which bears the expense even if the balance
premium is 90%.
 The scheme is compulsory for loanee farmers availing Crop
Loan /KCC account for notified crops and voluntary for
others.
 The scheme is implemented by empanelled general
insurance companies. The selection of the implementing

81
 agency (IA) is done by the concerned State Government Sustainable Agricultural
Development And Food
through bidding. Security-II

Pradhan Mantri Fasal Bima Yojana‟s Failure in North East:

 Out of Rs. 1,400 crores earmarked annually for the north-
eastern States under the Centre‟s flagship Pradhan Mantri
Fasal Bima Yojana, only Rs. 8 crore or just over half a per
cent was actually spent last year.
 Four north-eastern States like Arunachal Pradesh,
Nagaland, Manipur and Mizoram are not covered under the
scheme at all.
 The lack of coverage has left thousands of maize farmers
devastated by losses from the fall armyworm pest in the
Mizoram without any hope of insurance.
 Reasons
 States in the Northeast face challenges such as the lack of
interest by insurance companies and the lack of State
budgetary resources to pay their share of the premium.
o Insurance companies have been reluctant to bid for these
States, as the administrative costs are high.
o There are no proper land records and also historic yield data
is not available for these States, particularly at the gram
panchayat and block level.
o It is difficult to conduct CCEs (crop-cutting
experiments) needed for many horticulture crops. CCEs
are conducted to obtain fair, precise and accurate estimate
of the yield of crops.
o Insurance companies are also not interested because the
coverage is so limited. There are low numbers of loan
farmers in the Northeast, except in Assam.
 Lack of forecasting infrastructure has also hampered the
penetration of this weather-based insurance scheme in these
states.
To make insurance companies serve farmers in the north
eastern states, effective marketing of the farm produce is
required. Also, state governments either need to go with the
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Agricultural Development PMFBY scheme or have to have their own set of schemes for
and Policy
the sake of farmers.
5. E-marketplace: The government has created an electronic
national agriculture market (eNAM) to connect all regulated
wholesale produce markets through a pan-India trading
portal.
6. Massive irrigation and soil and water harvesting
programme to increase the country‟s gross irrigated area
from 90 million hectares to 103 million hectares by 2017.
7. The government has also taken significant steps to combat
under- and malnutrition over the past two decades, through
 The introduction of mid-day meals at schools. It is a
Centrally-Sponsored Scheme which covers all school
children studying in Classes I-VIII of Government,
Government-Aided Schools.
 Anganwadi systems to provide rations to pregnant and
lactating mothers,
 Subsidised grain for those living below the poverty line
through a public distribution system.
 Food fortification
8. The National Food Security Act (NFSA), 2013: National
Food Security bill has become into a legal entitlement –
National Food Security Act 2013 on 12 September 2013. It
is also called Right to Food Act. According to 27 th report of
Ministry of Consumer Affairs, Food and Public distribution,
providing food security has been the prime duty of the
government. So, it has been always focused on
governmental planning and policies. For ensuring food
security of the people, Indian government announced the
new act – the National Food Security Act. The objective of
this act is – To provide for food and nutritional security in
human life cycle approach, by ensuring access to adequate
quality food at affordable prices to people live a life to
dignity. Under this act up to 75 per cent of rural and 50 per
cent of urban population are receiving subsidized food grain
under Targeted Public Distribution System (TPDS). 5 Kgs
food grain at subsidised price of Rs. 3/-, 2/-, 1/- per kgs for
rice, wheat and coarse grain is providing per person per
83
 month. Antyodaya Anna Yojana will still continue and Sustainable Agricultural
Development And Food
poorest of poor people will continue to receive per month Security-II
35 kg of food grain under this scheme. Providing six
thousand maternity benefits and meal to lactating mother
pregnant women for nutritional support are other special
features of this act.
Salient Features of National Food Security Act:
1. Coverage 2/3rd population under Targeted Public
Distribution System (TPDS): Up to 75 per cent of rural
population and 50 per cent of urban population. BPL
households will continue to get 35 kg. food grain per month
at nominal rate under Antodaya Anna Yojana.
2. States have the right to determining eligibility criteria.
3. Pregnant and lactating women received 600 calories or
“take home ration” and 6000 rupees for six months under
maternity benefit.
4. Children (6 months to 14 years) have right to receive free
hot meals or “take home ration”.
5. The central governmental has entitled to provide funds to
states in case of short supplies of food grains.
6. Allocation of food grain of the states will be protected for
six months.
7. State government was entitled to provide food security
allowances to the beneficiaries in case of non-supply of
food grain.
8. Public distribution system will be reformed.
9. If eldest women in the household (18 years and above) is
the head of issuance of the ration card.
10. State and district level redress mechanism.
11. State food commissions will be constituted for
implementation and monitoring.
12. Approx. 1.5 per cent GDP (1.25 lac crore) is the
implementation cost.
13. Provision for penalty on public servant or authority.
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Agricultural Development 14. Transparency and Accountability
and Policy
4.4.2 Reality and Implementation of Government
Programmes in India:
These programs were formed for eliminate the problem of food
insecurity and malnutrition from our country but none of these
were run with complete honesty. Corruption has encroached
every scheme. Adequate food grain is not reaching the final
consumer. Many a times, recipients got lesser food grain as was
projected in the provision. Numerous times, quality of food
grain was not as good as the prerequisite. The go down
authorities sold the food grains in black market. Many studies
on MGNREGA indicate that wages paid are lower than
mentioned in the provision. Delay in payment is one of the
other distressing problems, because people have no other option
to feed one self and its family. Then, what does mean if this
scheme is unable to provide at least their payment. It has also
been observed many times that the payments of wages are not
delivered to right person and fake card holders get their
payment. In addition, fake construction works and fictitious
purchase, payment of ghost companies are other major
corruptions that are excavate the main objectives of these
schemes. Various scams are also founded in the Midday Meal
Scheme as about 22 children died after they took the poisoned
midday meal. Many schools show false register of students‟
enrolment to save food material for selling it in the black
market. And at the end, The National Food Security Act has to
tackle many ground level problems to ensure food security. For
example, food grain distributed through corrupt and leaky
system for sure will be a terrible decision. This scheme is
capable of disturbing our country‟s budget because; an extra
burden of 23 billion dollars has been uploaded for this.
Steps to be taken to Ensure Food Security:
 The government strategy needs to assume an integrated
policy framework to facilitate agriculture productivity.
o The actions should emphasis mainly on
rationale distribution of cultivable land, improving the
size of the farms and providing security to the tenant
cultivators apart from providing the farmers with enhanced
technology for agriculture and improved inputs like

85
 irrigation facilities, availability of better-quality seeds, Sustainable Agricultural
Development And Food
fertilizers and credits at lower interest rates. Security-II

o Aeroponics and tank farming are systems that allow plants

to be grown without soil. Plants grown in this way take in
water and nutrients efficiently. These methods can be used
in the areas of poor soil quality and soil erosion.
o Adoption of crops and methods with lower water
requirements, such as the System of Rice Intensification
(SRI) method of rice production, contributes to resilience by
enabling equal or better yields to be achieved with less
water withdrawal.
o Planting crops with lower water requirements and
agricultural practices that maintain soil moisture, such
as maintaining vegetative cover between crops, can also
contribute to resilience.
Crop diversification: Higher profitability and steadiness in
production highlight the importance of crop divergence, e.g.
legumes alternative with rice and wheat. Growing of non-cereal
crops such as oilseeds, fruits and vegetables etc need to be
encouraged.
 Strategies for better food storage should be adopted.
 The Blue Revolution: Sea, lakes and rivers can be used to
provide food and nourishment. Fish are a very good source
of protein and do not require good soil.
 Biotechnology and appropriate technology: Selective
breeding or genetic modification (GM) of plants and
animals can be done to produce specific features
and adaptations.
o For example, selective breeding has been used on dairy
cows to increase milk yields. GM has been used on wheat to
produce crops that are disease resistant.
 Existing direct nutrition programmes should be
revamped to enable management by women‟s Self-Help
Groups (SHGs) and /or local bodies along with orientation
and training of community health workers, Panchayati Raj
Institution (PRI) members, other opinion leaders, caregivers
and other stakeholders can be another area.
86
Agricultural Development  Efforts should be made by the concerned health
and Policy
departments and authorities to initiate and supervise the
functioning of the nutrition related schemes in an efficient
way.
o Annual surveys and rapid assessments surveys could be
some of the ways through which program outcomes can be
measured.
 Focus needs to be shifted to the workers in the informal
sector by providing decent wages and healthy working
conditions.
 Local community education on key family health and
nutrition practices using participatory and planned
communication methodologies will be helpful.
 The cooperatives play an important role in food security in
India especially in the southern and western parts of the
country. The cooperative societies set up shops to sell low
priced goods to poor people. The cooperatives should be
encouraged.
 Fostering rural-urban economic linkages can be an
important step towards ensuring food security by:
o enhancing and diversifying rural employment opportunities,
especially for women and youth,
o enabling the poor to better manage risks through social
protection,
o leveraging remittances for investments in the rural sector as
a viable means for improving livelihoods.
Conclusion:
 Food security of a country is guaranteed if all of its citizens
have adequate nutritious food available, all persons have
the capacity to buy food of acceptable quality and there
is no hurdle on access to food.
 The right to food is a well-recognized principle of
international human rights law. It has grown to include
an obligation for state parties to respect, protect, and fulfil
their citizens‟ right to food security.

87
 As a state party to the Universal Declaration of Human Sustainable Agricultural
Development And Food
Rights and the International Covenant on Economic, Social Security-II
and Cultural Rights, India has the responsibility to ensure
the right to be hunger free and the right to sufficient food.
 India needs to adopt a strategy that brings together varied
issues such as inequality, food diversity, indigenous rights
and ecological justice to ensure sustainable food security.
4.5 SUMMARY
Sustainable development is a process of change in which
misuse of resources, the direction of interests, orientation of
technical development and the institution change are in
harmony and enhanced both present day and forthcoming
potential to meet human needs and aspirations. Sustainable
agriculture is the system of rising crops for greater human
utility through use of resources with better efficiency without
disturbing, unbalancing or polluting the environment. India has
achieved green revolution due to the bigger use of high yielding
variety product seeds. But exhaustive use of land without taking
sufficient care to maintain its productive capacity leads to loss
of top soil due to erosion, loss of organic matter, loss of pores
soil structure and water logging and build-up of toxic salts and
chemicals. Excessive use of pesticides caused localized health
hazards. Unselective use of modem technology may endanger
ecological security and imbalance the environment. Thus, the
sustainability in Indian agriculture through the prevention of
diversification of land suitable for farming to non-farm uses,
integrated forest management, through preserving genetic
resources and management of marine resources. To achieve
justifiable agricultural development in India some policy
measures are suggested.
Food security of a nation is safeguarded if all of its citizens
have adequate nourishing food available, all persons have the
capacity to buy food of acceptable quality and there is no hurdle
on access to food. The people living below the poverty line
might be food uncertain all the time while better off people
might also turn food insecure due to calamity or disaster.
Although a large section of people suffers from food and
nutrition insecurity in India, the worst affected groups are
landless or land poor households in rural areas and people
employed in ill paid occupations and casual labourers engaged
in seasonal activities in the urban areas. The people
88
Agricultural Development experiencing food insecurity are disproportionately large in
and Policy
some regions of the country, such as economically backward
states with high occurrence of poverty, tribal and remote areas,
regions more prone to natural disasters etc. To guarantee
availability of food to all sections of the society the Indian
government prudently planned food security system, which is
composed of two components: (a) buffer stock and (b) public
distribution system. In addition to PDS, various poverty
improvement programmes were also started which comprised a
component of food security. Some of these programmes are:
Integrated Child Development Services (ICDS); Food-for-Work
(FFW); Mid-Day Meals; Antyodaya Anna Yojana (AAY) etc.
In addition to the role of the government in ensuring food
security, there are various cooperatives and NGOs also working
intensively towards this direction.
4.6 QUESTIONS
1. Explain concept and strategies are adopted for sustainable
development in agriculture sector.
2. Discuss the Schemes of Govt. of India to promote
sustainable development in agriculture sector.
3. Explain concept and measurement of food security in India.
4. Explain dimension and magnitude of food security in India.
5. Critically evaluate the Govt. policies related to food security
in India.

*****

89
 MODULE III

5
COMPETITIVENESS OF AGRICULTURAL
PRODUCTS AND MARKETING - I
Unit Structure
5.0 Objectives
5.1 Introduction
5.2 Measurement of efficiency of agricultural product in International
Market
5.3 Productivity and efficiency
5.4 Technical efficiency
5.5 Economic efficiency:
5.6 Competitiveness
5.7 Productivity measurement
5.8 Globalisation and Agriculture
5.9 Agricultural Marketing
5.10 Efficiency of Agricultural Market in India
5.11 Recent Development in Agricultural Marketing In India
5.12 Questions
5.13 References

5.0 OBJECTIVES
 To understand various components of efficiency in agricultural
production
 To know the measurement of efficiency of agricultural product
 To understand agricultural production and globalisation
 To know the difference between efficiency and competitiveness
 To understand efficiency of agricultural market in India
 To make the students aware of agricultural productivity and its
efficiency
 To know what type of market structure is suitable for agriculture
commodity

5.1 INTRODUCTION
 Agriculture:
Agriculture is in practice primary sector, contributor of GDP for Indian
Economy. Wherein it cultivates plants and livestock‘s, the science or
90
Agricultural Development practice of farming, including cultivation of the soil for the growing of
and Policy crops and the rearing of animals to provide food, wool, and other products.
Agriculture is backbone of developing nation. Major population directly
and indirectly employed in agrarian activity. India‘s main occupation and
source of employment is agricultural sector.

 Agriculture Commodity Contribution:

Among three important sectors viz, Primary-secondary-tertiary different
contribution from various sector take place every year. India is an agrarian
economy majorly more than half of its labor market representing
agriculture-related sectors and more than 54 percent of the nation‘s land
categorized as arable. India is one among the world‘s leaders in terms of
production volume for various commodities such as rice, wheat,
cotton, sugar, horticulture, and dairy. Agriculture and other related sectors
such as forestry and fisheries account for 19.9 percent of the country‘s
GDP (Source – India – Country Commercial Guide). Consequently, the
agricultural sector plays an important role in Indian economics, politics,
and society.
Indian agricultural production for food staples is highly based on nature i.e
monsoon (seasonal rainfall) dependent, and farm yields are generally
below world averages. Low productivity is caused due to many factors
such as inadequate farmer education and training, heavy and tight
government regulation, inefficient food distribution system, poor
infrastructure (which results in post-harvest losses of up to 40 percent for
certain products), unpredictable weather, small average farm sizes (2.7
acres/1.08 hectares and shrinking), and domestic agriculture support
programs and subsidies that distort market signals and hamper
investment.
The agricultural sector is slowly shifting and taking move from traditional
farming towards horticulture and livestock (poultry, dairy, and fishery)
production. There is more demand for fresh and processed products of all
types is increasing as the population urbanizes, incomes rise, and
consumption habits change. The growth of an efficient cold chain
network from ―farm to fork‖ will help curb the spoilage rate of agricultural
output while helping producers capture value as products retain quality
and provide increased benefits to consumers.
Imports of commodity which is consumer-oriented foods, led by tree nuts
and fresh fruits, are among the most fastest growing segments of imported
agricultural products and reached $5.14 billion in 2020. The market size
for imported foods has grown steadily due to a growing middle class, the
millennial generation, affluent professionals, brand-oriented importers,
modern retail outlets, E-Commerce retailers, and trend-setting restaurants.
Imported agrarian produce like nuts and fruits feed into India‘s traditional
retail channels, with an estimated 90 percent of imported fresh fruit sold in
roadside stands and open markets. Imported packaged and consumer-
ready foods are found in gourmet grocery stores, imported foods sections
of larger store formats, and in thousands of small neighborhood stores
91
(kirana stores). While opportunities for imported food in Competitiveness Of
the hotel, restaurant and institutional (HRI) and food processing sectors Agricultural Products And
are improving, the Indian market remains relatively small due to high Marketing - I
tariffs, ongoing import restrictions, and strong competition from the
domestic industry.
As per the sources information India‘s food and grocery retail business is
estimated at $500 billion. This data of retail sector is dominated by
traditional trade formats like neighborhood shops or kirana (mom and pop)
stores, which hold approximately 88 percent of the total market share in
sales. The market share held by modern trade formats such as
supermarkets and hypermarkets along with E-Commerce retailers is
expected to expand rapidly over the next five years as it fulfills the
evolving needs of consumers.
The retail and e-retail sector has experienced noteworthy consolidation
through new partnerships and acquisitions this year. India‘s e-retail
grocery market grew by 80 percent to $2.7 billion in 2020 primarily due to
COVID-19 and the resulting lockdown. The sector is expected to grow
rapidly over the next few years, due to expanding internet connectivity and
rising consumer demand for convenience, value, safety/hygiene, ease of
payment, and product variety. Opportunities for U.S. exporters exist in
consumer-oriented products, especially tree nuts, fruits, and
packaged/processed foods.
The emergence of larger chains and stores began around 2005, and the
sector has grown to over 8,100 modern retail outlets across India in 2020.
While many retailers are expanding and opening new stores, profitability
continues to be an issue, including high real estate costs.
India‘s casual dining and quick service restaurant sector is also on the
rise, with nearly 60 foreign restaurant brands across the country. Another
emerging trend is the rise of ―themed‖ dining restaurants serving cuisines
with a fusion of national and international foods. The use of E-Commerce
has also expanded dramatically. Due to lockdown restrictions and social
distancing norms, Indian customers turned to E-Commerce platforms to
secure essential food supplies. Since the COVID-19 pandemic in 2020,
the E-Commerce sector has seen significant changes as many food
manufacturers, retailers, distributors, importers, and E-Commerce firms
have come together to develop new distribution networks and take
advantage of synergies. For example, leading food delivery and cab
aggregator apps, such as Swiggy, Uber, Scootsy, and Zomato, have
partnered with traditional and modern retails to deliver groceries.
Over time, India has developed export competitiveness in certain
specialized products, making it the world‘s 9th largest exporter in
agriculture and related products. In 2020, India realized a $15.8 billion
trade surplus of agricultural, fishery, and forestry goods. Leading exports
consisted of Basmati rice, carabeef/beef frozen shrimp and prawns, cotton,
and refined sugar.

92
Agricultural Development
and Policy

5.2 MEASUREMENT OF EFFICIENCY OF

AGRICULTURAL PRODUCT IN INTERNATIONAL
MARKET
Agriculture is one of the main occupations of Indian Economy.
Agricultural contribution to GDP reached to 20% as per the source of
Economic Survey in last 17 years hits the contribution in GDP of India for
year 2020 -2021. The Finance Minister, Ms Nirmala Sitharaman tabled the
Economic Survey 2020-21 on January 29, 2021.As per the Economic
Survey Report committee, in 2020-21, the growth rate of agriculture is
estimated to be 3.4%. While the contribution of the sector to Gross Value
Added (GVA) declined from 18.3% to 17.8% between 2014-15 and 2019-
20, it is estimated to increase to 19.9% in 2020-21. This is because the
agricultural sector faced fewer disruptions on account of the COVID-19
pandemic as compared to non-agricultural sectors.
Under National Food Security Act, 2013, the central government provides
rice and wheat at subsidised rates (called central issue price (CIP)). The
difference between the CIP and the market price gives quantum of food
subsidy. While the CIP of wheat and rice has not been revised since the
introduction of the Act, the economic cost of wheat increased from Rs
1,908.32 per quintal in 2013-14 to Rs 2,683.84 in 2020-21 (an increase of
41%). In addition, the economic cost of rice increased from Rs 2,615.51
per quintal in 2013-14 to Rs 3,723.76 per quintal in 2020-21 (an increase
of 42%). The survey observes that revision of CIP to reduce the rising
expenses on food subsidy bill.
The Europian Union among the world country member is the first trader in
agricultural products, both in terms of exports of agricultural commodity
and imports. Agricultural trade helps to answer possible food production
shortages due to climatic or other reasons. Ultimately, it contributes to the
prosperity and source of income of farmers, industries and consumers. The
study and data of WTO's Trade Statistics, share of India's agricultural
exports and imports in the world agriculture trade in 2017 was about
2.27% and 1.90%, respectively. The exports of Agri commodities during
March 2020 to June 2020 were Rs. 25552.7 Crore against an export of Rs.
There are two ways how commodities can be traded of which the
international agricultural Trading in the spot market; which means that the
commodities are exchanged immediately when setting a deal, either for
cash or other goods. The price is set according to the current market prices
and delivery occurs immediately or a few days later.

93
India ranked into the top 10 list of agricultural produce exporters in 2019 Competitiveness Of
with a contribution in the export of rice, cotton, soya beans and meat, Agricultural Products And
according to a World Trade Organization (WTO) report on the trends in Marketing - I
world agricultural trade in the past 25 years. The most important
agricultural commodity which are exports of India are cereals (mostly
rice - Basmati and non-Basmati), spices, cashew,
oilcake/meals,tobacco, tea,coffee and marine products. There has been
significant increase in the Value of agricultural -exports to total exports of
the country that has been ranging between 15 to 20 per cent. And if we
talk about import, then approximately 54% or more than half the
agricultural -imports by India is of vegetable oils. India's vegetable oil
imports in 2020-21, up to February 2021, are worth Rs. 74,286 crores.
There are some other major agricultural -imports are fresh fruits, pulses,
spices, and cashew.
 Reforms undertaken in Indian Agricultural functioning for
improvement in agricultural performance (Source – Government
of India, Ministry of agriculture and farmer welfare)
1) E-Compendium of Published Articles on Farm Reforms Act 2020
2) Central Sector Scheme of Financing Facility under Agriculture
Infrastructure Fund.
3) Clarification regarding CHC as eligible project under Agriculture
Infrastructure Fund
4) Standard Operating Procedure (SoP) for release and use of Grants-in-
aid to State Governments for Administrative Cost of Project
Monitoring Unit (PMU)- reg.
5) Minutes of VC held held on 02.12.2020 with States on Agriculture
Infrastructure Fund
6) Guidelines of Agriculture Infrastructure Fund in Hindi
7) Clarification regarding Interest Subvention in Central Sector Scheme
for financing under Agriculture Infrastructure Fund
8) Appointment of M/s NABCONS as KP as part of PMU under AIF

5.3 PRODUCTIVITY AND EFFICIENCY

Productivity and efficiency are considered as an important indicator and
measures of competitiveness. The universal definition of Agricultural
Productivity is a ratio of a volume measure of output to a volume
measure of input use.
 Agricultural productivity and efficiency play crucial role in framing
policies and measures for farming sector.
 The Sustainable Development Goals undertaken effective initiative on
agricultural productivity.
94
Agricultural Development  And also focussed on research on statistical frameworks for additional
and Policy productivity and efficiency targeted to developing countries is
necessary. Information and awareness on agricultural productivity is
related to several of the Sustainable Development Goal indicators, in
particular: With respect to world economy the global initiatives, such
as the 2030 Agenda for Sustainable Development, some of the
countries have introduced policies to expand and improvise
agricultural productivity, especially in countries where agriculture is a
main/major economic sector and the productivity gap is wider among
the primary sector and other industries and services.
 Increasing productivity in agriculture is advantageous due to its
effective contribution to poverty reduction through improved and
better food security and higher income farm generated through farm
production.
 The key role of agricultural productivity in the economic and social
agenda of developing countries was reinforced by the Malabo
Declaration of June 2014, which represent agricultural productivity
growth as a significant objective of Africa to achieve agriculture-led
growth and achieve targets on food and nutrition security.
 In the Declaration, it is stated that in order to end hunger in Africa by
2025, agricultural productivity needed to be double with effect from
current level

 Concept of productivity and efficiency:

Technical efficiency and productive efficiency are significant concept
for overall improvement in performance of agriculture contribution

5.4 TECHNICAL EFFICIENCY

Technical efficiency is the type of inputs and resources that can be utilise
in the production process production technology.

 The concept of technical efficiency is most relevant because it

justifies the presence of differentiated productivity targets, taking into
account both the resource and input base (the technology), and the
distance to the most efficient practices: a holding can be efficient in
the sense that it has reached its own potential maximum production,
but less productive than a less efficient farm benefiting from higher
quality inputs.

 A meta-analysis applied to review empirical study of technical

efficiency in developing country agriculture.

 The objective of the study is to find a better understanding of the

factors that influence estimates of mean technical efficiency.

95
 The factors such as primal versus dual, number of fixed inputs and Competitiveness Of
number of variable inputs increase average technical efficiency Agricultural Products And
Marketing - I
estimates.

 In parallel to that, using the Cobb–Douglas functional form and cross-

sectional data yields a lower level of technical efficiency.

 Multiple Other factors, consists of number of variables in the model,

crop type, stochastic versus deterministic frontiers and sample size,
not consider important factors of estimation of technical efficiency.

 A crucial understanding and measurement of efficiency in agriculture

is required in the context of lower availability of important resources
and production factors, such as land or water in optimum quantity and
quality.
Diagrammatical representation of technical efficiency can be explained
through production frontier. In fig.1, The production frontier corresponds
to the combination of inputs that generate the maximum attainable output.
Accordingly, the production frontier is in fact the best practice frontier
(Charnes et al. 1978). It differs across countries and regions because of
differences in the nature, quality and availability of the inputs, such as soil
quality, precipitation levels and qualification of the workforce.

Technical efficiency can be explained with the help of suitable diagram

Agricultural holding operating with two substitutable inputs, such as
labour and machinery, is considered. Any combination of labour and
machinery along the black line (point A, for example) corresponds to
technical efficiency, in the sense that the farm produces the maximum
amount allowed by the technology.

96
Agricultural Development The technology is characterized by aspects such as the type of soil,
and Policy meteorological patterns or the type of capital and labour available. The
bisecting line (black line) illustrates the total production or yield reached
with the chosen combination of the two inputs. The farm currently
operates at F1, an inefficient level. To reach the level of efficiency
frontier, there is requirement to better use the inputs at its disposal.
Consider now a new technology, characterized by inputs of a better
quality, such as richer soils or a better-trained workforce or machinery that
is more efficient. The efficient production technology can be achieved at
higher production frontier in fig. 1 at point B. By using better technology
production at F2 by adopting technical efficiency lying between point A
and B in the given diagram.

5.5 ECONOMIC EFFICIENCY

Economic efficiency means to achieve the maximum amount of
production per hectare or per animal, with minimal expenditure of
manpower and materials.

 Economic efficiency need to be based on knowledge of the elements

that illustrate the production effort and having three important
sources: the optimal use of resources, rational use of labour and
production management. It is estimated as quantitative ratio between
the effects (E) and the resources or efforts (R) made to obtain them.
In achieving maxi

 mum effect with a specified level of consumptions, or reaching the

determined effect with minimum consumption: e = E / R max
(maximizing the effects obtained per unit of allocated, consumed
resources); e = R / E min (minimizing the resource consumption per
unit of effect achieved).

 According to Kelly et al. (1996), an agricultural holding reaches

economic efficiency when the marginal value of the inputs is equal to
their respective unit costs: if the marginal value is higher, the holding
can earn higher profits by producing more, thereby becoming more
efficient. If the marginal value is lower, the farm should reduce its
production to increase its profits.

97
 Competitiveness Of
Agricultural Products And
Marketing - I

In fig 2 the y-axis represents the output value and the x-axis the
inputs costs. The black line indicates how inputs are transformed into
outputs: the points situated on this line indicate that the agricultural
holding is operating at the highest potential yield or production given the
type and quality of inputs used, that is, it is technically efficient. Assuming
fixed input and output prices, any increase in production value for
technically efficient holdings from VA to VB because of an increase in the
quantity of input used (from CAto CB).
The ratio between output value and input value measures the amount of
value generated by one monetary unit of input: in other the words, the
economic return per monetary unit spent. This indicator is also known as
unit margins or profits. The figure illustrates that the additional return
generated by an increase in use of inputs declines as more inputs are being
used: the additional value created by moving from A to B is higher than
for the change from B to C and so on until reaching E. After E, any
additional quantity of input used does not translate into higher output,
meaning that the additional return is 0. E can, therefore, be understood as
the point at which the farm is economically efficient: before E, there is
scope to increase the overall profitability by using more inputs; after E,
any additional use of input will result in lower profits. This is due to the
existence of declining returns to scale in agriculture. Yields can rise as far
as more inputs are used, but up to a certain point, after which, the use of
additional inputs will have no impact on yields and only result in higher
costs.

5.6 COMPETITIVENESS
 There is difference between economic efficiency and competitiveness.
Economic efficiency is absolute measure of economic performance of
the agricultural farm.

 And competitiveness compares performance to that of the

competitors. a farm can be economically inefficient but competitive
because other farms are even less efficient.

98
Agricultural Development  Reciprocally, an economically efficient farm is not necessarily
and Policy competitive if all the other farms are also economically efficient.

 Competitiveness also goes beyond the price/cost performance and

extends to the features attached to the output or to
the producing firm (or sector, country), such as quality attributes, both
true and perceived.

 For example, a firm can have comparatively high unit costs but may
benefit from a high ―non-price‖ competitiveness, which allows it to
sell its products at a higher price.

5.7 PRODUCTIVITY MEASUREMENT

Its origin is from microeconomics ―theory of the firm‖ in which, based on
several assumptions, it can be stated that inputs can be used economically
combined in such a way so that the objective of optimum allocation of
scarce resources by allowing firms to maximize profits subject to a cost
constraint or to minimize costs subject to an output constraint.

 productivity measures describe the relationship between the

production of a commodity — good or service — and the inputs used
to produce that commodity. It can be the relationship between one or
more products and one or more inputs.

Agricultural productivity depends on two components:

(a) The type and quality of the inputs used in the production process
(b) How well these inputs are combined.

 The type and quality of the inputs used in the production process
represents the production technology while How well these inputs are
combined refers to the technical efficiency of the production process.

 Production technology is characterized by the type of inputs and

resources available. For a given commodity, many different
technologies may exist, reflecting different economic, environmental
and agronomic conditions.

 However, in general, in empirical studies of productivity and

efficiency there is no explicit reference to competitiveness is made.

 A common definition of productivity is the ability of production

factors to produce the output.

 It can be simply measured as a partial productivity indicator, relating

output to one input (e.g. yields or partial productivity of labour), but
this does not account for the possibility of either factor substitution or
output substitution.

 By contrast, the more comprehensive measure of total factor

productivity (TFP) (sometimes called the multi-factor productivity,
99
 MFP) is a ratio that relates the aggregation of all outputs to the Competitiveness Of
aggregation of all inputs. Agricultural Products And
Marketing - I
Productive Efficiency is relevant in a dynamic framework, where change
in TFP, that is to say productivity improvement, is investigated. Potential
productivity improvement is evaluated when firms are compared to a
benchmark: in cross-section data, firms are compared with each other in
the same period, while in a time-series approach one firm is considered
during two periods. In the first case, a firm can increase its productivity in
comparison with other firms by improving its efficiency and/or by
reaching an optimal scale of operation. In the second case, all firms can
increase their productivity owing to technological progress.

5.8 GLOBALISATION AND AGRICULTURE

The functioning of new economic policy will influence the Indian
agriculture to reform pricing policy in agricultural sector basically to drop
the drawback of support – procurement - administered prices and farm
subsidies mechanism and ―also out of its own emergency and in response
to GATT challenges and opportunities that will emerge in international
markets in the near future, agriculture market can be progressively
integrated with the global market.
Significant objective of globalising the Indian Agriculture is based on
three expected principle:
1. Cost of production can be reduced with the entry of foreign
competitors in to India‘s domestic market and stimulate local
producer.
2. Reduction In the cost of production to the local producer of domestic
market will encourage and make them strong enough to export more.
3. Due to liberalisation and globalisation in agricultural sector there will
be freedom of access to foreign investment the economy will benefit
from an inflow of both financial resources and advanced technology.

 It has been analysed that Over the past decade, international

agricultural and food markets found a number of changes, which have
brought domestic and international markets closer together.

 Since 2000, trade in agro-food products has grown strongly – more

strongly than in the preceding decade at close to 8% in real terms
annually between 2001 and 2014 compared to 2% between 1990 and
2000 – as world markets responded to a more rules-based trading
environment, falling tariffs, and reductions in trade-distorting
producer support.

 Global agricultural production has also continued to increase, driven

by rapid growth in a number of developing regions, in particular those
of Asia and South America. But agro-food trade is not only increasing
but becoming ‗global‘ as well.
100
Agricultural Development  The food and clothing that consumers find in their local stores are
and Policy increasingly made from a wider range of products, produced in a
wider range of locations across the globe.

 From the changes found in agro-food markets, there has been a

important increase in trade among emerging and developing
countries, which are increasing in importance, both as suppliers and
markets for agro-food products.

 Increasing trade has also been accompanied by deeper integration of

the world‘s food system.

 A growing contribution of agro -food marketing is included in global

value chain (GVCs) of agricultural and food processing value chains
that are spread over several countries – linking agro-food sectors and
other sectors of the economy from across the world.

 With the successful marketing roles and facilities, various marketing

organisations and agencies make it possible for commodities, produce
and products to move from producers to consumers.

 However, these facilities incur costs, often of significant magnitude.

5.9 AGRICULTURAL MARKETING

Concept And Definitions:
Meaning:
 Market:
The word market comes from the latin word ‗marcatus‘ which means
merchandise or trade or a place where business is conducted.
Word ‗market‘ has been widely and variedly used to mean
(a) a place or a building where commodities are bought and sold, e.g.,
super market;
(b) potential buyers and sellers of a product, e.g., wheat market and
cotton market;
(c) potential buyers and sellers of a country or region, e.g., Indian market
and Asian market;
(d) and organization which provides facilities for exchange of
commodities, e.g., Bombay stock exchange; and
(e) a phase or a course of commercial activity, e.g., a dull market or
bright market.
Agricultural Marketing is inclusive of the services involved in
movement of agrarian farm product from the farm area towards the
reachability of the consumer. These services involve the planning,
organizing, directing and handling of agricultural produce in such a way as
101
to fulfil the needs and requirements of the farmers, intermediaries and Competitiveness Of
consumers. Numerous interconnected activities are involved in doing this, Agricultural Products And
such as planning, production, growing and harvesting, grading, packing Marketing - I
and packaging, transport, storage, agro- and food processing, provision of
market information, distribution, advertising and sale.

Components of Market Structure:

1. Concentration of Market Power:
This is an important element for determining the nature of competition and
consequently of market conduct and performance. This is measured by the
number and size of firms existing in the market. The extent of
concentration represents the control of an individual firm or a group of
firms over the buying and selling of the produce. A high degree of market
concentration restricts the movement of goods between buyers and sellers
at fair and competitive prices, and creates an oligopoly or oligopsony
situation in the market.

2. Degree of Product Differentiation:

Whether or not the products are homogeneous affects the market structure.
If products are homogeneous, the price variations in the market will not be
wide. When products are heterogeneous, firms have the tendency to
charge different prices for their products. Everyone tries to prove that his
product is superior to the products of others.

3. Conditions for Entry of Firms in the Market:

Another dimension of the market structure is the restriction, if any, on the
entry of firms in the market. Sometimes, a few big firms do not allow new
firms to enter the market or make their entry difficult by their dominance
in the market. There may also be some government restrictions on the
entry of firms.

4. Flow of Market Information:

A well-organized market intelligence information system helps all the
buyers and sellers to freely interact with one another in arriving at prices
and striking deals.

5. Degree of Integration:
The behaviour of an integrated market will be different from that of a
market where there is no integration either among the firms or of their
activities

 Problems of agriculture marketing:

In agricultural marketing transportation cost, inadequate market
infrastructure, lack of market information, lack of processing units,
storage facility, price fluctuation are the major problems.

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Agricultural Development  Essentials of a good market:
and Policy
1. Holding Capacity: The ability of holding the food product produced
by farmer till the optimum remunerative price of product is essential.
Due to poor economic condition and urgent need of money insist
them to sell food produce at less than remunerative price.
2. Storage: agricultural food produce are perishable in nature. There is
scope of getting food grain spoil if not taken care of, thus proper
storage facility should be there.
3. Transport facility: one of other essential service which need to be on
time available is transportation facility. What is produced by farmer is
important and when it reaches to final consumer in the market through
proper transportation facility is another most important factor.
4. Direct access to the market: this helps to remove the exploitation of
middlemen. Maximum of the profitability is captured by the
middlemen due to which farmers do not get scope to even earn normal
profit.
5. Communication: proper channel of communication prevent farmers
to both farmers and consumers by providing them correct and
complete market situation information and about current exsisting
price in the market.

 Structure of Agricultural Market:

1. Generally agricultural markets are "perfectly competitive," which
means homogeneous product is produced by and for many sellers and
buyers, they are well aware about prices.
2. Market price is determined by the intersection of supply and demand.
3. Economists operate agricultural markets as an example of perfect
competition.
4. The actual right sequence of the market structure from most to least
competitive is perfect competition, imperfect competition, oligopoly,
and pure monopoly.
5. The identical crops that different agriculturalists grow are mostly
interchangeable.
6. A perfectly competitive firm will not sell below the equilibrium price
either.
7. Agricultural marketing covers the services included in moving an
agricultural product from the farm to the consumer.
8. These services involve the planning, organizing, directing and
handling of agricultural produce in such a way as to satisfy farmers,
intermediaries and consumers.

103
9. Agricultural marketing brings producers and consumers together Competitiveness Of
through a series of activities and thus becomes a significant Agricultural Products And
component of the economy. Marketing - I

10. The scope of agricultural marketing is not only limited with the final
agricultural produce.
11. It also focuses supply of agricultural inputs (factors) to the farmers.
Through this chapter we can measure the of efficiency of agricultural
product in International Market. Also, can understand and find the
level of efficiency of agricultural product.
12. Firms are said to be in perfect competition when the following
conditions occur:
a. the industry has many firms and many customers/buyers
b. all firms produce identical/homogeneous products
c. sellers and buyers have complete information to make rational
decisions about the product being bought and sold firms can easily
enter without any barrier.

 Important functions of agricultural marketing.

1. Assembling:
Collection of farm produce for sale. This is usually carried out to ensure
greater convenience and economy during transportation, grading or
processing.

2. Grading:
Grading involves separating the commodities into different sizes, varieties,
tastes, quality, colour etc. This is done to enhance market value and
uniformity.

3. Processing:
Processing describes the transformation of farm produce into a more
consumable form. e.g. conversion of wheat into flour.

4. Transportation:
This is the movement of farm produce from the place of production to the
place of final consumption. Transportation of farm products is carried out
through various means such as road, rail, air, and water.

5. Storage:
This is the act of keeping or holding large supplies of produce from the
period of production until when needed by the consumers.

104
Agricultural Development 6. Packaging:
and Policy
Packaging is described as the process by which farm products are
bundled or packed into containers of different attractive shapes, sizes
and patterns in order to entice consumers as well as enhance sales.
In this chapter we will learn about measurement of agriculture product its
contribution in GDP and its relevance in international market. Difference
between efficiency and competitiveness and also technical and economic
efficiency can be understood with the help of suitable diagram
Agriculture satisfies the significant basic need of human being by
producing various food. About a hundred years ago, farmer used to
produce food commodities mostly for self-consumption or for barter
system exchange with others (cash or kind) mostly in the same village or
nearby places. They were primarily self-reliant. But, now production
environment has changed considerably from self- reliance to
commercialization producing more of commercial crop. Technological
advancement in the form of high yielding varieties production (HYVP),
use of fertilizers, insecticides, pesticides, farm mechanization has led to a
drastic expansion in farm production and consequently the larger
marketable and marketed surplus. The improved production is
accompanied by the increasing urbanization, income, changing life style &
food habits of the consumers and increasing linkages with the overseas
market. Today consumers and the buyer of agricultural goods are not
limited to rural areas where food is produced. There has been drastic,
increasing demand for further processed or semi-processed food products
requires value addition in the raw agricultural produce. These
developments require movement of food commodities from producer to
consumers in the form of value added products. Agricultural marketing is
the source in which producers and
consumers together through a series of activities and thus becomes an
essential component of the economy. The scope of agricultural marketing
is not only limited with the final agricultural produce. It also focuses
supply of agricultural inputs (factors) to the farmers.

 Key features of agricultural marketing:

1. Agricultural marketing including all activities involved in supply of
farm inputs to the farmers and movement of agricultural products
from the farms to the consumers.
2. The agricultural marketing system comprises two major sub-system
viz. product marketing and input (factor) marketing. The product
marketing sub-system are inclusive of farmers, village/primary
traders, wholesalers, processors, importers, exporters, marketing
cooperatives, regulated marketing committees and retailers. The input
sub-system includes input manufacturers, distributors, related
associations, importers, exporters and others who make available
various farm production inputs to farmers.

105
3. The agricultural marketing system can be analysed as a link between Competitiveness Of
the farm and non-farm sectors. The innovative, dynamic and growing Agricultural Products And
agriculture sector requires fertilizers, pesticides, farm equipments, Marketing - I
machinery, diesel, electricity, packing material and repair services
which are produced and supplied by the industry and non-farm
enterprises. The growth in the size of farm output stimulates forward
linkages by providing surpluses of food and natural fibres which
require transportation, storage, milling or processing, packing and
retailing to the consumers. These functions are performed by the non-
farm enterprises. Further, if the increase in agricultural production is
accompanied by a rise in real incomes of farm families, the demand of
these families for non-farm consumer goods goes up as the proportion
of income spent on non-food consumables and durables goods have a
tendency to rise with the increase in real per capita income. Several
industries, thus find new markets for their products in the farm sector.

5.10 EFFICIENCY OF AGRICULTURAL MARKET IN

INDIA
Agricultural and Marketing in India is multi diversified and flexible. It is
managed by both public sector and private sector undertaking. Trade in
agriculture sector plays significant role in expanding the size of consumer
goods market.
Hence study on margins and costs usually include the topic of marketing
efficiency. An efficient marketing system is one which is capable of
moving goods from producer to customer at the lowest cost consistent
with the provision of the services that customers demand. The idea of cost
involved once known to us then accordingly efficient market system can
be formed. Efficiency of agricultural product can Increase in a variety of
ways: by increasing the volume of business using improved handling
methods, investing in modern technology, locating the business in the
most appropriate place, implementing better layouts and working practices
in production, improving managerial planning and control and/or by
making changes in marketing arrangements (e.g. through horizontal or
vertical integration).
The word market is derives from latin word marcatus which relates to
trade or a place where business is conducted. The Word market has been
largely used to mean
(a) a place or a building where commodities are bought and sold, e.g.,
super market;
(b) potential buyers and sellers of a product, e.g., wheat market and
cotton market;
Agricultural marketing is composed of two words-agriculture and
marketing. Agriculture, in wider term, means activities aimed at the use of
natural resources for human welfare, i.e., it includes all the primary
activities of production. But, generally, it is applied in growing and/or
106
Agricultural Development raising crops and livestock. Marketing includes a series of activities
and Policy involved in moving the goods from the point of production to the point of
consumption. It includes all the activities involved in the creation of time,
place, form and possession utility. According to Thomsen, the study of
agricultural marketing, comprises all the operations, and the agencies
conducting them, involved in the movement of farm-produced foods, raw
materials and their derivatives.
Expansion in agricultural product provide better marketable surplus.
Increase in the agricultural product and marketing of it leads to boost the
economic condition of agriculturally based personal, by improving their
purchasing power capacity. It will also helpful in inventing new structure
of production of agriculture product by investing more in to agricultural
sector research areas.

Marketing Efficiency:
The size of production in any sector become irrelevant if we do not
consider the marketing aspect of the same. Hence we need to consider the
following process.
1. There could be handling of all marketing activities by producer alone.
2. There could be takeover of all marketing activities by the various
categories of consumers of agricultural products.
3. There could be total take over by the state.

5.11 RECENT DEVELOPMENT IN AGRICULTURAL

MARKETING IN INDIA
In India at present there are approximately thousands of agricultural
markets. They charge numerous fees of large magnitude and hence
become a source of political power.
In current years the Central and State governments have come up with
many changes to improve agricultural marketing in our country.

 Following are some of the recent developments in agriculture

marketing:
The Ministry of Agriculture had developed a Model Agricultural Produce
Market Committee (APMC), Act in 2003. It has asked all the state
governments to modify their respective APMC Acts along with lines of
Model APMC Act, 2003.

 The Model APMC:

(a) provides for direct sale of farm produce to contract farming sponsors.
(b) to set up 'special markets' for 'specified agricultural commodities',
mostly perishables.

107
(c) permits private persons, farmers and consumers to establish new Competitiveness Of
markets for agricultural produce in any area. Agricultural Products And
Marketing - I
(d) to have a single levy of market fee.
(e) replacing licensing with registration of market functioning.
(f) provides direct sale to consumers.
(g) provides for creating required market infrastructure.
The central government through variations of APMCs and using
constitutional provisions aims at creating a national market (common
market) for agricultural produce.
Recently it was suggested to disband the APMCs as they create more
obstacles in the functioning of free markets. It was suggested to have
Terminal markets which would operate on 'Hub and Spoke' format, where
the terminal market (the hub) would be linked to a number of collection
centres (spoke).
Many state exempted the marketing of fruits and vegetables from the
purview of the APMC Act.
To improve agricultural marketing, the Department of Agriculture has
issued a comprehensive advisory to the states which includes the
following measures:
 To declare entire state as single market.
 One licence for the entire state.
 Removing all restrictions on the movement of agricultural produce
within the state.
 To develop Common National Agricultural Market (NAM) through
Agri-Tech Infrastructure Fund (ATIF).
 Following are some of the Measures which is initiated to allow
farmers to sell their products directly to consumers, specially in big
cities.
The Inter Ministerial Task Force on Agricultural Marketing Reforms has
listed following priority areas to introduce changes or improve the existing
system.
1. Legal reforms
2. Direct marketing
3. Market infrastructure
4. Pledge financing
5. Warehousing receipt system
6. Forward and future markets

108
Agricultural Development 7. Price support policy
and Policy
8. Information technology in agricultural marketing
9. Marketing extension, training and research

5.12 QUESTIONS
1. Explain Features of agricultural marketing.
2. Describe Measurement of efficiency of agricultural product in
International Market.
3. What is relevance of concept of technical efficiency?
4. What are various recent reformation in agricultural marketing in
India?
5. How does the concept productive efficiency influence functioning of
agriculture.
6. Describe commodity contribution of agricultural produce in world
market.

5.13 REFERENCE
1. Ball, V. E. & Norton G.W. (eds) 2002. Agricultural Productivity:
Measurement and Sources of Growth, Springer: Berlin.
2. Aignier, D., Lovell, K., C.A., & Schmidt, P., 1977 Formulation and
Estimation of Stochastic Frontier Production Function Models.
Journal of Econometrics 6 (1): 21-37.
3. Ludena, C.E. 2010. Agricultural Productivity Growth, Efficiency
Change and Technical Progress in Latin America and the Caribbean.
IDB Working Paper Series 186. Inter-American Development Bank,
Washington, D.C.
4. Acharya, S.S. and N.L. Agarwal (2011), Agricultural Marketing in
India, Oxford & IBH publishing Company Pvt Ltd., Fifth edition.

Websites:
1. https://agricoop.nic.in/en
2. https://www.trade.gov/country-commercial-guides/india-food-and-
agriculture-value-chain

*****

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 6
COMPETITIVENESS OF AGRICULTURAL
PRODUCT AND MARKETING - II
Unit Structure
6.0 Objectives
6.1 Introduction
6.2 Form and impact of government intervention in the market
6.3 Effects of government intervention on efficiency
6.4 Commodity market operation and likely impacts
6.5 strategies for surviving in a globalising world
6.6 Questions
6.7 References

6.0 OBJECTIVES
1. To know the government intervention in the agricultural market
2. To understand the effects of government intervention on efficiency of
agricultural production
3. To understand Commodity market and its impact in economic growth
4. To know various strategies applied in world market for sustainability
of agricultural market

6.1 INTRODUCTION
Indian Agriculture Economy:
India’s population is 1.27 billion and it is the world's second most
populous country. India is the seventh largest country all over the world
with an area of 3.288 million sq kms. It has a long coastline of over 7,500
kms. India is a diverse country where over 22 major languages and 415
dialects are spoken (Source: Food and agriculture organisation). With the
highest mountain range in the world, the Himalayas to its North, the Thar
desert to its West, the Gangetic delta to its East and the Deccan Plateau in
the South, the country is home to vast agro-ecological diversity. India is
the world's largest producer of milk, pulses, and jute, and ranks as the
second largest producer of rice, wheat, sugarcane, groundnut, vegetables,
fruit and cotton. It is also one of the leading producers of spices, fish,
poultry, livestock and plantation crops. Worth $ 2.1 trillion, India is the
world's third largest economy after the US and China.
 India's economic growth in financial year 2018 is expected to
accelerate to 6.75 percent in 2018 on improved performance in both
industry and services. India is the world's sixth-largest economy
110
Agricultural Development by nominal GDP and the third largest by purchasing power
and Policy parity (PPP).
 The country ranks 139th in per capita GDP (nominal) with $2,134 and
122nd in per capita GDP (PPP) with $7,783 as of 2018 (World Bank
data). Agriculture accounted for 23% of GDP and employed 59% of
the country's total workforce in 2016.
 Agriculture, with its allied sectors, is the largest source of livelihoods
in India. 70 percent of its rural households still depend primarily on
agriculture for their livelihood, with 82 percent of farmers being small
and marginal. In 2017-18, total food grain production was estimated
at 275 million tonnes (MT).
 India is the largest producer (25% of global production), consumer
(27% of world consumption) and importer (14%) of pulses in the
world. India's annual milk production was 165 MT (2017-18), making
India the largest producer of milk, jute and pulses, and with world's
second-largest cattle population 190 million in 2012
 It is the second-largest producer of rice, wheat, sugarcane, cotton
and groundnuts, as well as the second-largest fruit and vegetable
producer, accounting for 10.9% and 8.6% of the world fruit and
vegetable production, respectively.

Challenges faced by Indian Agriculture:

 India still has many growing concerns. As the Indian economy has
diversified and grown, agriculture's contribution to GDP has steadily
declined from 1951 to 2011. While achieving food sufficiency in
production, India still accounts for a quarter of the world’s hungry
people and home to over 190 million undernourished people.

 Incidence of poverty is now pegged at nearly 30 percent. As per the

Global Nutrition Report (2016), India ranks 114th out of 132
countries on under-5 stunting and 120th out of 130 countries on
under-5 wasting and 170th out of 185 countries on prevalence of
anaemia. Anaemia continues to affect 50 percent of women including
pregnant women and 60 percent of children in the country.

 While agriculture in India has achieved grain self-sufficiency but the

production is, resource intensive, cereal centric and regionally biased.
The resource intensive ways of Indian agriculture has raised serious
sustainability issues too.

 Increasing stress on water resources of the country would definitely

need a realignment and rethinking of policies. Desertification and land
degradation also pose major threats to agriculture in the country.

 The social aspects around agriculture have also been witnessing

changing trends. The increased feminisation of agriculture is mainly
due to increasing rural-urban migration by men, rise of women-

111
 headed households and growth in the production of cash crops which Competitiveness Of
are labour intensive in nature. Women perform significant tasks, both, Agricultural Product And
in farm as well as non-farm activities and their participation in the Marketing - Ii
sector is increasing but their work is treated as an extension of their
household work and adds a dual burden of domestic responsibilities.
India also needs to improve its management of agricultural practices on
multiple fronts. Improvements in agriculture performance has weak
linkage in improving nutrition, the agriculture sector can still improve
nutrition through multiple ways: increasing incomes of farming
households, diversifying production of crops, empowering women,
strengthening agricultural diversity and productivity, and designing careful
price and subsidy policies that should encourage the production and
consumption of nutrient rich crops. Diversification of agricultural
livelihoods through agri-allied sectors such as animal husbandry, forestry
and fisheries has enhanced livelihood opportunities, strengthened
resilience, and led to considerable increase in labour force participation in
the sector.

 Indian Government and Agriculture:

Governments have employed various measures to maintain farm prices
and incomes above what the market would otherwise have yielded.
They have included tariffs or import levies, import quotas, export
subsidies, direct payments to farmers, and limitations on production.
 Tariffs and import quotas can be effective only if a country normally
imports some of its supply. Export subsidies result in higher prices to
domestic consumers than to foreign purchasers; their use requires
control over imports to prevent foreign supplies from entering the
domestic market and bringing prices down.
 Direct payments to farmers have been used to maintain prices to
consumers at reasonable levels, while assuring farmers a return above
world-market levels. Limitations on production, intended to reduce
supply and thus increase prices, have been used in Brazil (for coffee)
and in the United States (for major crops) production.
 The United States and the other parties to the world's foremost
international trade arrangement, the General Agreement on Tariffs
and Trade (GATT), have formally agreed to participate in an eighth
round of multilateral trade negotiations (MTN). The negotiations were
launched in Punta del Este, Uruguay, in September 1986 with the
signing of the ministerial declaration. The broad objectives and
principles for these negotiations, to be called the Uruguay Round, are
set forth in the declaration.
 Discussions on organizational matters and trade negotiating plans
began in October 1986. Hard bargaining is expected to be under way
by spring and agriculture will receive notably greater attention in this
process than ever before. One of the major U.S. objectives is to
liberalize agricultural trade.
112
Agricultural Development  Other major aims are to reach agreements that would free trade in
and Policy services. expand foreign investment opportunities and provide
guidelines for international transfers of intellectual property rights.
The agricultural policies of trading countries are thought to be an
important contributor to both falling commodity prices and the slow
growth of world trade in the eighties.
 Trade barriers, price and income support programs, and other
domestic agricultural policies buffer agricultural producers in many
countries from world price movements and discourage supply
adjustments. In this policy environment, world supply has continued
to grow faster than demand, leading to unprecedented stock
accumulations pressure on world prices and putting downward

6.2 FORM AND IMPACT OF GOVERNMENT

INTERVENTION IN THE MARKET
Government intervention in agriculture has received increased public
attention in domestic as well as international market. Institutional risk
results from uncertainties surrounding Government actions. Tax laws,
regulations for chemical use, rules for animal waste disposal, and the
level of price or income support payments are examples of government
decisions that can have a major impact on the farm business.
Federal policies impacting the domestic economy, foreign affairs, and
trade initiates all can have a significant impact on the agricultural sector.
At the state level, government agencies promote local agricultural
products, provide food safety and inspection services, soil
conservation and environmental protection.
Forms of government intervention:
 Economic policy.
 Regulations.
 Tax.
 Price controls.
 Subsidy.
 MARKETING FORMS INTRODUCED BY THE
GOVERNMENT:
In the post-independence period the government introduced different
forms of marketing to help the agriculturists market their product in more
competitive way.

Forms of Marketing:
(1) Co-Operative Marketing

113
(2) Regulated Markets Competitiveness Of
Agricultural Product And
(3) State Trading Marketing - Ii

1. Co-Operative Marketing:
It has a three tier structure with primary marketing societies at the village
level, central societies at the district level and state marketing societies at
the state level. However, there are variations from state to state. At present
there are about 4000 primary marketing societies in the country.

Chart 6.1 brings out the structure of co-operative marketing.

Chart 6.1: Structure of Co-operative Marketing

Functioning of the cooperative marketing society takes place in the

following manner:
(i) Members (farmers) agree to sell their surplus produce to the
marketing cooperative societies.
(ii) Members get an advance from the society on their agricultural
activities and to meet other needs.
(iii) The society collects the produce of members and even from non-
members who are willing to sell their produce to the society.
(iv) Society processes the produce, grades it and then disposes it off in the
market at a time when the prices are considered to be appropriate.
(v) Members are then paid the balance money.
By performing the above functions, the cooperative marketing societies
save the farmers from exploitation, avoid unnecessary middlemen, enable
the farmers get a better price and save them from many problems
associated with agricultural marketing.
To provide other services and empower the farmers, cooperative societies
like processing, storage (warehouse) etc. are formed. To assist in the task
of storage the National Development Corporation was formed. For
procurement, distribution, export and import of agricultural products the
National Agricultural Cooperative Marketing Federation of India Ltd.
(NAFED) was established.

2. Regulated Markets:
A regulated market is established under statutory regulation. It is
essentially aimed at protecting farmers, consumers, and other market
114
Agricultural Development functionaries from exploitation. A regulated market is administered by a
and Policy market committee which consists of representatives of the state
government, the legal bodies like district board, the traders, the
commission agents and the farmers.

 The market committee ensures:

i) Elimination of malpractices such as incorrect weights, unauthorised
charges or deduction, absence of grading and delay in payments etc.
ii) Fixing market charges like commission for agents, storage charges,
rent for market space etc.
iii) Remunerative prices to the farmers through proper supervision of
market activities.
iv) Redressing grievances after receiving complaints and providing
arbitrators if necessary.
v) Information about prices by collecting the required data about
changes in demand, supply, and other related variables etc.
vi) Help in securing storage facilities to the farmers to store their
produce at reasonable charges till they get a better remunerative price.
vii) Bringing down the price spread by eliminating unwanted
middlemen and unnecessary commissions.
At present there are more than 7,000 regulated markets and about 22,000
rural periodic markets of which 15 percent function under the ambit of
regulation. Regulated markets have succeeded to a great extent in many of
the above tasks.

3. State Trading:
It was introduced by the central government and by some state
governments. Food Corporation of India the Maharashtra State Monopoly
Procurement Scheme, Jute Corporation of India are some of the examples
of state trading. It helps overcome wide fluctuation in agricultural prices in
the free market. State trading offers a minimum price to the farmers while
procuring commodities to maintain the buffer stock. Government will
make a direct purchase from the farmers at the assured minimum price.
Production of agricultural commodities fluctuates due to the vagaries of
the monsoon. Demand for these commodities is almost inelastic.
Therefore, any increase in output will lead to a drastic decline in its prices.
Given the almost constant demand, it helps a farmer produce and supply
less at a higher price. To bring farmers out of this situation the government
ensures a minimum price even when market price declines to a level
below the minimum price.

115
6.3 EFFECTS OF GOVERNMENT INTERVENTION ON Competitiveness Of
Agricultural Product And
EFFICIENCY Marketing - Ii

Government has taken various measures in the field of agricultural

marketing:
1. Marketing surveys: government has undertaken survey on
agricultural marketing and published it. The basic objective behind
the survey of agricultural product is to remove the problems related
with the agricultural marketing. As awareness related to price is
necessary as per the rights of consumer thus government publishes to
prices of agricultural goods in all major markets.
2. Grading and standardization: the agricultural produce grading and
marketing act, 1937 the government has established grading stations
for commodities like ghee, flour, eggs etc. around 162 agricultural
and allied commodities. Further process is applied on agrarian graded
commodities by in the form of stamping, sealing, and putting
AGMARK. The agricultural product with AGMARK has wider
market and has better command at its price. Government also tried to
maintain better quality for which Quality control laboratory has been
set up at Nagpur and eight other regional laboratories indifferent parts
of the country. Special attention has been given on commercial crops.
3. Setting up of regulated markets: There are approximately 7062
regulated market. This is one of major reformation taken by the
government to remove corruption in agricultural market. The
malpractices from mandis have been disappeared due to application of
regulated market. About 80% of agricultural produce is sold in
regulated market.
4. Provision of Warehousing facilities: Distress sale is one of the
major issue for farmers basically to small and marginal farmers. And
to aid to the farmers government provided warehousing in towns and
villages. The Central warehousing corporation was set up in 1957with
the basic objective of constructing and running godowns and
warehouses for the storage of agricultural produce. Food corporation
is constructing its own network of godowns in parts of the country. 35
million tonnes are the total storage capacity.
5. Organisation of Co – operative marketing societies: government
promoted to multipurpose co – operative societies with more
emphasis on credit and marketing. Establishment of various
marketing societies has been set in for example – primary marketing
at central level, apex marketing at state level and the National
Agricultural Co-operative marketing societies and federation through
State Bank of India and other Nationalised bank. Government also
promoted National Co-operative Development Corporation (NCDC)
in 1965. And encouraged programmes for production, processing,
storage, and marketing of agricultural produce through co – operative
societies.
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Agricultural Development 6. Setting up of Special Boards: Development councils has been set up
and Policy by the government for the commodities like rice, pulses, jute, millets,
cotton, tobacco, oilseeds, sugarcane, arecanut, etc. The government of
India also framed and set up export promotion councils such as
cashewnuts export promotion Council and the Agricultural processed
Food Export Development Authority.
7. Boost to Export of Agricultural Products: Agricultural Produce has
shown positive increasing trend in present scenario. India’s
agricultural exports include pulses, rice, wheat, tobacco, sugar,
molasses, poultry and dairy products, spices, cashew nuts, Seasame
and niger seed, groundnuts, oilmeals, castor oil, shellac, fruits and
vegetables meat and meat preparation, marine products, etc. foreign
trade policy (2004 – 09) of the government of India has emphasized
the significance of agricultural exports and has initiated a new scheme
- Special Agricultural Produce Scheme – for promoting the export of
fruits, vegetables, flowers, minor forest produce. Government is also
supporting and assisting states for development of Agro Export
Zones(AEZ).
8. Agricultural Marketing Reforms: To make agricultural sector more
competitive and broadening the size government of India appointed
Task Force and submitted report in June 2002 which recommends:
i. Promotion of direct marketing and Contract farming
ii. Development of agricultural markets in private and cooperative
sectors
iii. Expansion of future trading to cover all agricultural markets
iv. Introduction of negotiable warehousing receipt system
v. Use of information and technology to provide market – led extension
service to the farmers
The Government of India has drafted and circulated a model Act on
agricultural marketing, in 2004 state government agreed to adopt the
Model Law.
9. Future Trading: the government initiated economic reform and
permitted the resumption of future trading in gur, potato, castor seed,
pepper, turmeric and hessian castor oil. In 2003 – 04 the government
of India initiated some major steps towards introduction of future
trading in all commodities by setting up the National Level
Commodity Exchanges. And the major commodities are Wheat,
Kapas, Soya oil, gaur gum, jute, rubber, pepper, turmeric etc. The
National Commodity and Derivative Exchange, Mumbai has launched
Pilot projects in the states of Gujrat, Madhya Pradesh, and Andhra
Pradesh to help farmers understand the concepts and benefits of
hedging the price risk on trading platform of an exchange price to
harvesting. These innovation in brought out the efficiency in
Agricultural Marketing.

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6.4 COMMODITY MARKET OPERATION AND Competitiveness Of
Agricultural Product And
LIKELY IMPACTS Marketing - Ii

Meaning:
A commodity market described as buying, selling, or trading a raw
product, such as oil, gold, or coffee. There are hard commodities, which
are generally natural resources, and soft commodities, which are livestock
or agricultural goods.

Features of Commodity market:

1. Commodity Market in India is having aims to stabilise prices of
commodity.
2. It supports to create a linkage between the spot market and future
market.
3. In India, there are four commodity trading stock exchanges:
i) Multi Commodity Exchange of India Limited(MCX)
ii) National Commodity & Derivatives Exchange Limited (NCDEX)
iii) National Multi-Commodity Exchange (NMCE)
iv) Indian Commodity Exchange.
v) Amongst these four, NCDEX and NMCE focuses on agricultural
commodities.
4. Agri commodity marketing undertaken via future contracts.
5. These contracts generally used for hedging against risk and may be as
an opportunity to profit from speculation.
6. A commodity is an essential product.
7. Agricultural commodities fall into the category of soft commodities;
hard commodities are usually mined products.
8. There has been a significant government intervention in Agriculture
sector since long back basically it tries to protect the interest of Indian
farmers.
9. Role of futures market come into picture when there is devastating
price crash of crops.

Indian Agricultural Commodity Market and its impact:

 Commodity market in India is in existence since the commodity
market of USA and UK. The markets have been facing recurring
fluctuations of ups and down since beginning but the country is
successfully bringing degree of stability in the commodity market

118
Agricultural Development with progressing technology and transparency. Market forces of
and Policy demand and supply rule the commodity market.
 Commodity market: It is a market that involves trade in primary
sector of the economy. Commodities are classified into two different
forms : Soft commodities and hard commodities. Soft commodities
are agricultural products such as Sugar, coffee, cocoa, wheat and fruit.
Hard commodities are generally mined such as oil and gold. The
traditional way of trading and investing in commodities is through
futures contract which means buying or selling an underlying asset at
a predetermined price on a specified time in future.
 Future contracts are secured by physical assets. Trading in commodity
market can either be done physically or through derivatives using spot
prices, options, forwards and futures. Farmers generally use derivative
trading in the commodity market for managing the price fluctuation
risks. Agricultural commodities are staple crops and animals produced
or raised on farms or plantations. Most agricultural commodities such
as grains, livestock, and dairy provide a source of food for people and
animals across the globe.

 Agricultural commodities fall into six categories:

1. Cereal Grains
2. Oilseeds
3. Meat
4. Dairy
5. Other Soft Commodities
6. Miscellaneous Agricultural Commodities
1. Cereal Grains: The seven principal cereals grown in the world are
wheat, maize, rice, barley, oats, rye and sorghum. Wheat became
very popular because of the bread produced. A Primary Food Source
Farmers grow these commodities as: Food source for humans Food
source for animals Feedstock for fuels. Depending on price, farmers
will choose one grain over the other. As a result, most grain
commodities have a strong price relationship with one another.
Traders monitor the spread between grain prices to determine the
relative values of one grain versus another.
2. Oilseeds: Castor is cultivated around the world because of the
commercial importance of its oil. India is the world’s largest producer
of castor seed and meets most of the global demand for castor oil.
India produces 10 to 12 lakh tonnes of castor seed annually, and
accounting for more than 60% of the entire global production.
In India, Castor planting season is during July or August and harvested
around December or January. The seedpods are dried, de‐ podded and

119
brought to the market yards during December or January for trading. Competitiveness Of
Traditionally, castor is a Kharif season crop. Sowing of castor with onset Agricultural Product And
of monsoon is found most beneficial in rainfed condition. However, Marketing - Ii
sowing can be done up to first fortnight of August without reduction in
yield under irrigated condition. Gujarat is the leading state in castor seeds
production in India followed by Rajasthan and Andhra Pradesh. Castor oil
is obtained by pressing the seeds, followed by solvent extraction of the
pressed cake. Castor Oil’s application range is very wide. The usages.
India is one of the largest rapeseeds‐ mustard growing countries in the
world, occupying the first position in area and second position in
Production after China. The world production of Rapeseed/Mustard has
been increasing at a rapid rate in several countries largely in response to
the continuing increase in demand for edible oils and its products.
In India, Rajasthan occupies the first place both in terms of cultivated area
and production accounting for over 45% followed by Madhya Pradesh
with 13%. Haryana and Uttar Pradesh occupy the third place contributing
for 11% of total production each. Thus, the top four states produce about
80% of total rapeseed & mustard production in the country. Major
domestic spot markets are Sri ganga nagar, Jaipur, Kota, Alwar,
Charkhidadri and Delhi. The sowing of the seeds is done after the harvest
of the Kharif crop in the month of November and is mainly cultivated on
irrigated land. Rape/Mustard seed is a rabi crop i.e. the plantation of the
Rape/Mustardseed is done in the winter History of soybeans is as old as
over 2000 years before birth of Christ. Chinese cultivators are said to
recognize the real health value of the bean. Chinese Emperor Shen-nong
declared it as one of the five sacred crops. He compiled earliest known
medical treatise, which is translated as The Medical Bible of Yellow
Emperor. He researched the healing properties of over 100 plants and
considered the soyabean as most significant. It has been an important food
ingredient of China, Manchuria, Japan, Korea, and Malaysia over
centuries. Though it originated from Southwest Asia, now it is grown all
over the world. It is becoming increasingly popular in Europe and US
among health and diet conscious people. Today, it is the world’s most
cultivated oilseed. The oil content in Soyabean is between 17-18% and it
has very high content of protein. Owing to high protein content soyabean
meal has varied usage.
In India, Madhya Pradesh tops the list of soyabean producing states.
Nearly 88% of soyabean is produced in the state. Main varieties grown are
Punjab-1, Braig, Ankur, Gaurav and Jawahar. Farmers grow them for (a)
the high oil content in their seeds and (b) the meal that remains after the
oil is extracted: Canola Cotton Palm Oil Soybeans In the case of cotton, its
plant fibers have an important market in the clothing and houseware
industries. Because farmers use the meal from these crops in animal feed,
oilseeds often have a strong price relationship with cereal grains.
3. Meat: A Food Source Feeder Cattle Cattle via Pixabay Meat
commodities include (a) live animals raised for meat, hide, organs,
bones, and hooves and (b) cuts of meat produced during the

120
Agricultural Development butchering of animals: Feeder Cattle Live Cattle Lean Hogs Pork
and Policy Bellies
4. Dairy: Post-19th Century Food Products Cheese stallCheese Stall by
QMETHODS from Pixabay Dairy commodities include milk, butter,
whey, and cheese. Markets for these commodities date back to the
19th century when traders organized the Chicago Butter and Egg
Board. Today these products trade on the Chicago Mercantile
Exchange (CME).
5. Other Soft Commodities Soft commodities refer to commodities that
are farmed rather than mined. However, most commodity traders
classify cereal grains, oilseeds, dairy, and meat separately. The
remaining soft commodities all have developed and liquid global
markets: Cocoa Coffee Frozen Concentrated Orange Juice (FCOJ)
Sugar
6. Miscellaneous Agricultural Commodities Some commodities have
well-developed global markets, but don’t fit easily into the above
categories: Lumber Rubber Wool

6.5 STRATEGIES FOR SURVIVING IN A

GLOBALISING WORLD
Meaning of Globalisation:
The term globalization means a set of phenomena of high intensity in
quick succession throughout the global of, economic, social, cultural, and
ideological aspects. These events gradually lead to the elimination of the
tangible and intangible barriers to free movement of goods and people, to
the dissemination of knowledge. Although some scholars, economists and
sociologists argue that the roots of globalization date back to centuries
past, the term was apparently coined by Theodore Levitt (Levitt, 1983),
American economist, and since then this term has almost radically
replaced the expression often used i.e. "global village".
The beginning of this change can be traced back to the summit of the G6
meeting in Rambouillet (France) in 1975, when the general liberalization
of the market process was created, governed by the GATT and later by the
WTO, IMF and World Bank Investment. Since then, other definitions of
globalization have been proposed, for example, the ODCE has interpreted
this phenomenon as "a process through which markets and production in
different countries are becoming increasingly interdependent due to the
dynamic exchange of goods and services and through movements of
capital and technology."
Emerging countries that have experienced their greatest growth in the last
two decades are those that have demonstrated a greater trade and financial
integration in the global economy; emblematic examples are the countries
of Southeast Asia and the new EU partners. The economic growth of these
countries has promoted a e more rapid diffusion of new technologies and
the formation and the improvement of human resources.
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Economic globalization has generated a process of market innovation and Competitiveness Of
communication, through direct and indirect effects, in the primary sector Agricultural Product And
and particularly in the agribusiness sector. Marketing - Ii

Supply and demand of agricultural products and especially food is

centred not only at national or local level but also at a global level.
The actual effects of globalization are those that lead to the
standardization of economic conditions and lifestyles of people in
accordance with the Western model.
The international economic crisis that began in 2009 is affecting all
sectors of production, for the agricultural sector it has been a crisis of
business income that according to Eurostat data registered a decline of
around 25%. Such a decrease in the income of farmers is unprecedented
and was the worst in Europe. This negative result is mainly due to on one
hand from the gradual decline in sales prices and on the other hand by the
continuous increase in production costs. To worsen the economic situation
of enterprises in addition to the volatility of the price system a significant
decline in consumer demand to the situation has also contributed, a
phenomenon due to the recession that has brought down prices below the
threshold of company viability. This situation of crisis has seen a
considerable decrease in the added value (VA) of the agricultural sector by
3.1% in 2009 in respect to the previous year, representing 6.4% loss when
compared to the added value of the last five years. This decrease translates
into a loss of EUR 900 million for 2009 and EUR 2 billion over the last
five years. This recession has slowed the capacity to invest and innovate in
business and stopped the production processes aimed at economic growth.
One of the important features of economic development is the relative
decline of the agricultural sector in growing economies. Also typical for
countries with a reasonably high population density is a decline in their
agricultural comparative advantage as industrialization proceeds (or when
another sector such as mining, manufacturing or services enjoys an export-
led boom or there is a sustained inflow of foreign aid). There is a wide
dispersion across regions of the world in the importance of agriculture in
national GDP and employment, in endowments of arable land and fresh
water as well as capital per worker, in the availability of modern farm and
non-farm technologies that take account of relative factor prices and hence
in agricultural comparative advantage.
Appropriate indicators of agricultural comparative advantage are difficult
to assemble, because government policies that distort food markets are so
pervasive and because of the range of technologies made available via
adaptive research and development (R&D) investments to suit different
relative factor scarcities (Hayami & Ruttan 1985; Alston et al. 2009 a,b).
Thus, the sector's share of national exports relative to the global average,
or even net exports as a ratio of exports plus imports of primary
agricultural products are rather poor reflections of comparative advantage,
and they also conceal much intra-regional diversity.

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Agricultural Development  Strategies adopted in World Trade Organization (WTO)
and Policy agreement for AOA i.e Agreement on Agriculture:
After over 7 years of negotiations the Uruguay Round multilateral trade
negotiations were concluded on December 15, 1993 and were formally
ratified in April 1994 at Marrakesh, Morocco.
The WTO Agreement on Agriculture was one of the many agreements
which were negotiated during the Uruguay Round.
The implementation of the Agreement on Agriculture started with effect
from 1.1.1995. As per the provisions of the Agreement, the developed
countries were to complete their reduction commitments within 6 years,
i.e., by the year 2000, whereas the commitments of the developing
countries were to be completed within 10 years, i.e., by the year 2004. The
least developed countries were not required to make any reductions. The
products which are included within the purview of this agreement are what
are normally considered as part of agriculture except that it excludes
fishery and forestry products as well as rubber, jute, sisal, abaca and
coir.
The important objective of this agreement is to increase market orientation
in agriculture for the member nations. The members are required to alter
their non-tariff barriers like quotas into equivalent tariff measures. The
tariffs resulting from such transformation and other tariffs on agricultural
products are to be reduced on an average by 36 per cent over a period of 6
years in case of developed countries, countries. No such commitments
were necessary in case of least developed countries.

The AoA covers the following aspects of agriculture:

 Tariff reduction
 Increase in market access
 Reduction in export subsidies
 Reduction in domestic subsidies

The WTO Agreement on Agriculture contains provisions in 3 broad

areas of agriculture and trade policy:
1. Market access
2. Domestic support
3. Export subsidies
1. Market Access:
It consist of tariffication, tariff reduction and access the opportunities. The
tariffication is that all non-tariff barriers such as quotas, variable levies,
minimum import prices, discretionary licensing, state trading measures,

123
voluntary restraint agreements etc. need to be remove and abolish and Competitiveness Of
converted into an equivalent tariff. Agricultural Product And
Marketing - Ii
Ordinary tariffs including those resulting from their tariffication were to
be reduced by an average of 36% with minimum rate of reduction of 15%
for each tariff item over a 6-year period. Developing countries were
required to reduce tariffs by 24% in 10 years.
Developing countries as were maintaining Quantitative Restrictions due to
balance of payment problems, were allowed to offer ceiling bindings
instead of tariffication.
Special safeguard provision allows the imposition of additional duties
when there are either import surges above a particular level or particularly
low import prices as compared to 1986-88 levels.
It has also been stipulated that minimum access equal to 3% of domestic
consumption in 1986-88 will have to be established for the year 1995
rising to 5% at the end of the implementation period.

2. Domestic Support:
For domestic support policies, subject to reduction commitments, the total
support given in 1986-88, measured by the Total Aggregate Measure of
Support (total AMS), should be reduced by 20% in developed countries
(13.3% in developing countries).
Reduction commitments refer to total levels of support and not to
individual commodities. Policies which amount to domestic support both
under the product specific and non-product specific categories at less than
5% of the value of production for developed countries and less than 10%
for developing countries also excluded from any reduction commitments.
Policies which have no or at most minimal, trade distorting effects on
production are excluded from any reduction commitments (‘Green Box’-
Annex 2 of the Agreement on Agriculture www.wto.org. The list of
exempted green box policies includes such policies which provide services
or benefits to agriculture or the rural community, public stockholding for
food security purposes, domestic food aid and certain de-coupled
payments to producers including direct payments to production limiting
programmes, provided certain conditions are met.
Special and Differential Treatment provisions are also available for
developing country members. These include purchases for and sales from
food security stocks at administered prices provided that the subsidy to
producers is included in calculation of AMS. Developing countries are
permitted untargeted subsidised food distribution to meet requirements of
the urban and rural poor. Also excluded for developing countries are
investment subsidies that are generally available to agriculture and
agricultural input subsidies generally available to low income and resource
poor farmers in these countries.

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Agricultural Development 3. Export Subsidies:
and Policy
The Agreement contains provisions regarding members commitment to
reduce Export Subsidies. Developed countries are required to reduce their
export subsidy expenditure by 36% and volume by 21% in 6 years, in
equal installment (from 1986 –1990 levels). For developing countries, the
percentage cuts are 24% and 14% respectively in equal annual installment
over 10 years. The Agreement also specifies that for products not subject
to export subsidy reduction commitments, no such subsidies can be
granted in the future.
 Strategies adopted in World Trade Organization (WTO)
agreement for AOA i.e Agreement on Agriculture with respect to
INDIA’S COMMITMENTS
1. Market Access:
As India was maintaining Quantitative Restrictions due to balance of
payments reasons (which is a GATT consistent measure), it did not have
to undertake any commitments regarding market access. The only
commitment India has undertaken is to bind its primary agricultural
products at 100%; processed foods at 150% and edible oils at 300%. Of
course, for some agricultural products like skimmed milk powder, maize,
rice, spelt wheat, millets etc. which had been bound at zero or at low
bound rates, negotiations under Article XXVIII of GATT were
successfully completed in December 1999, and the bound rates have been
raised substantially.

2. Domestic Support:
India does not provide any product specific support other than market
price support. During the reference period (1986-88), India had market
price support programmes for 22 products, out of which 19 are included in
our list of commitments filed under GATT. The products are – rice, wheat,
bajra, jawar, maize, barley, gram, groundnut, rapeseed, toria, cotton,
Soyabean (yellow), Soyabean (black), urad, moong, tur, tobacco, jute, and
sugarcane. The total product specific AMS was (-) Rs.24,442 crores
during the base period. The negative figure arises from the fact that during
the base period, except for tobacco and sugarcane, international prices of
all products was higher than domestic prices, and the product specific
AMS is to be calculated by subtracting the domestic price from the
international price and then multiplying the resultant figure by the quantity
of production.
Non-product specific subsidy is calculated by considering subsidies given
for fertilizers, water, seeds, credit and electricity. During the reference
period, the total non-product specific AMS was Rs.4581 crores. Taking
both product specific and non-product specific AMS into account, the total
AMS was (-) Rs.19,869 crores i.e. about (-) 18% of the value of total
agricultural output.

125
Since our total AMS is negative and that too by a huge magnitude, the Competitiveness Of
question of our undertaking reduction commitments did not arise. As such, Agricultural Product And
we have not undertaken any commitment in our schedule filed under Marketing - Ii
GATT. The calculations for the marketing year 1995-96 show the product
specific AMS figure as (-) 38.47% and non-product specific AMS as
7.52% of the total value of production. We can further deduct from these
calculations the domestic support extended to low income and resource
poor farmers provided under Article 6 of the Agreement on Agriculture.
This keeps our aggregate AMS below the de minimis level of 10%.
India’s notifications on AMS are available at web site address
www.agims.wto.org

1. Export Subsidies:
In In India, exporters of agricultural commodities are not entitled to export
subsidies except as those provided under Article 9.1 (d) and (e) of the
WTO Agreement on Agriculture under Special and Differential Treatment
provisions of the WTO. This flexibility has been provided up to the end of
the year 2023 after which all export subsidies will be required to be
eliminated as per the Nairobi Ministerial Decision on Export Competition
of 2015.

6.6 QUESTIONS
1. What are the features of Commodity Market?
2. Explain different form of market regulated by Government.
3. What are various measures adopted by government for agricultural
market?
4. How WTO agreement played significant role at global level for better
Agricultural system with respect to India?
5. What are various challenges before Indian Agriculture System?

6.7 REFERENCE
Books:
1. Singh, A. S. (2010). Fundamentals of Agricultural Economics.
Jammu: Himalaya Publishing House.
2. Sundharam, R. D. (2010). India Economy. Delhi: S. CHAND &
COMPANY LTD.

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Agricultural Development Journal :
and Policy
1. Bisen, D. R., & Ashtikar, D. R. (2016). A STUDY ON EXISTING
LITERATURE OF COMMODITY MARKET. International Journal
Of Management Studies.
2. Nelson, G.C., Valin, H., Sands, R.D., Havlik, P., Ahammad, H.,
Deryng, D., Elliott, J. et al. 2014. Climate Change Effects on
Agriculture: Economic Responses to Biophysical Shocks.
Proceedings of the National Academy of Sciences of the United States
of America, 111(9): 3274–79.
https://doi.org/10.1073/pnas.1222465110.

Website:
https://www.fao.org/india/fao-in-india/india-at-a-glance/en/

*****

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 MODULE IV

7
HISTORY & POLICIES FOR
AGRICULTURAL DEVELOPMENT IN
INDIA - I
Unit Structure
7.0 Objectives
7.1 Introduction
7.2 Trends in Production since 1950
7.3 National Food Policy in India
7.4 Agriculture policy in India
7.5 Summary
7.6 Questions

7.0 OBJECTIVES
 To know the Agriculture production trends in India
 To know about National Agriculture policy adopted by Govt. of India
 To know about latest agriculture policy implemented by Govt. of
India

7.1 INTRODUCTION
Since independence, India has been an agriculturally based economy,
though the share of agriculture in Indian GDP has gone down over a
passage of time with the growth of the Indian economy. When we
compare India with countries like USA and China, we find that our
productivity in many agricultural products is quite low. It is mainly due to
Green Revolution that despite facing many natural calamities like famines
and floods today we have a surplus stock of agricultural products in our
country. In 2012-13 our food grain production was roughly around 260
million tons as against 55 million tons at the time of independence.
Agriculture still continues to be the main occupation in India which is not
the case with many developed countries.
The agricultural sector has been the backbone of the Indian economy
representing three major which includes a) increasing rural income b)
promoting inclusive growth and c) to maintain food security. As per 2018,
agriculture employed more than 50% of the Indian workforce and
contributed 17% to 18% to country’s GDP.

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Agricultural Development 7.2 TRENDS IN PRODUCTION SINCE 1950
and Policy

The productivity in the agricultural sector faced a downslide in the initial

years after independence as the average yield of cereals per acre declined
from 619 lbs in 1946-47 to 565 lbs in 1949-50.
With the concept of economic planning being introduced in 1951, a major
thrust was given to agricultural development specially after 1962 the
agricultural sector which was lying stagnant showed some positive signs
of growth.
1. Steady growth in the average yield per hectare.
2. There was a steady growth in the area under cultivation
3. The total production in the crops showed a uptrend as both the yield
per hectare and area under increased steadily.

7.2.1 Trends in Food-grains Production:

The increase in agricultural production has an important impact on the
economic development of a country. In India, the increase in the
production of food-grains has been given in table 1.
Table 1: Trends in Production of Food grains
Lakh tonnes
Year Rice Wheats Cereals Pulses Total Percentage
food- increase in
grains production
1950-51 20.58 6.46 15.38 8.41 50.82 -
1960-61 34.58 11.00 23.74 12.70 82.02 61.39
1970-71 42.22 23.83 30.55 11.82 108.42 32.19
1980-81 53.63 36.31 29.02 10.63 129.59 19.53
1990-91 74.29 55.14 32.70 14.26 176.39 36.11
2000-01 84.98 69.68 31.08 11.08 196.81 11.58
2010-11 95.98 86.87 43.40 18.24 244.49 24.23
2011-12 105.30 94.88 42.01 17.09 259.29 6.05
2012-13 105.23 93.51 40.04 18.34 257.13 -0.83
2013-14 106.65 95.85 43.29 19.25 265.05 3.08
2014-15 105.48 86.53 42.86 17.15 252.03 -4.91
2015-16 104.41 92.29 38.52 16.32 251.54 -0.20
2016-17 109.70 98.51 43.77 23.13 275.11 9.37
2017-18 112.76 99.87 46.97 25.42 285.01 3.60
2018-19 116.48 103.60 43.05 23.40 284.95 -0.02
2019-20* 118.43 107.59 47.48 23.15 296.65 4.11
Source: Directorate of Economics and Statistics, * 4th Advance Estimates

It reveals from table 1, that in the last fifty-two years food-grains

production has increased by about more than three times. The increase in
the production of rice was nearly five times while it was over fifteen times
as far as wheat is concerned. Here, it is worth noting that there exists a
wide variation in the production of food-grains.
During the course of first two five years plans or in ten years, the
production of food-grains was on the increase but in 1970-71 it has shown
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a declining trend. Further, in next ten years it has shown more a declining History & Policies For
trend, but in 1990-91 production of food-grains has increased to a great Agricultural Development In
extent, but in the subsequent years, the rate of growth of agricultural India - I
production was shown fluctuations.
According to the first column of the table, the production of Rice was
20.58 lakh tones in 1950-51 which turned to double i.e. 42.22 lakh tones
in 1970-71 year. From 2015-16, its production was recorded increasing
trends.
The production of wheat increased from 6.46 lakh tons in 1950-51 to
86.87 lakh tons in 2010-11 indicating an increase of 1244.74% over a
period of 60 years. According to the 4th advance estimate the output of
wheat would be 107.59 lakh tons in 2019-20 which implies an increase of
23.85% over 2010-11.
The production of cereals increased from 15.38 lakh tons in 1950-51 to
43.4 lakh tons in 2010-11 indicating an increase of 182.18% over a period
of 60 years. According to the 4th advance estimate the output of cereals
would be 47.48 lakh tons in 2019-20 which implies an increase of 9.4%
over 2010-11.
The production of pulses increased from 8.41 lakh tons in 1950-51 to
18.24 lakh tons in 2010-11 indicating an increase of 116.88% over a
period of 60 years. According to the 4th advance estimate the output of
pulses would be 23.15 lakh tons in 2019-20 which implies an increase of
26.91% over 2010-11.
The production of food grain increased from 50.82 lakh tons in 1950-51 to
244.49 lakh tons in 2010-11 indicating an increase of 381.09% over a
period of 60 years. According to the 4th advance estimate the output of
food grain would be 296.65 lakh tons in 2019-20 which implies and
increase of 21.33% over 2010-11.

7.2.2 Trends in Non-Food Grains Production:

The trends in non-food grains production in India after the introduction of
economic planning is shown in table 2.
Table 2: Trends in Production of Non-Food grains
Lakh tonnes
Year Cotton# Jute & Mesta@ Sugarcane Oilseeds
1950-51 3.04 3.31 57.05 5.16
1960-61 5.60 5.26 110.00 6.98
1970-71 4.76 6.19 126.37 9.63
1980-81 7.01 8.16 154.25 9.37
1990-91 9.84 9.23 241.05 18.61
2000-01 9.52 10.56 295.96 18.44
2010-11 33.00 10.62 342.38 32.48
2011-12 35.20 11.40 361.04 29.80
2012-13 34.22 10.93 341.20 30.94
2013-14 35.90 11.68 352.14 32.75
2014-15 34.80 11.13 362.33 27.51

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Agricultural Development 2015-16 30.01 10.52 348.45 25.25
and Policy 2016-17 32.58 10.96 306.07 31.28
2017-18 32.81 10.03 379.90 31.46
2018-19 27.93 9.82 405.42 31.52
2019-20* 35.49 9.91 355.70 33.42
Source: Directorate of Economics and Statistics, * 4th Advance
Estimates, # Million bales of 170 kg. each, @ Million bales of 180 kg.
each

The production of cotton increased from 3.04 million bales in 1950-51 to

33 million bales in 2010-11 indicating an increase of 985.53% over a
period of 60 years. According to the 4th advance estimate the output of
cotton would be 35.49 million bales in 2019-20 which implies an increase
of 7.55% over 2010-11.
The production of jute & Mesta increased from 3.31 lakh tons in 1950-51
to 10.62 lakh tons in 2010-11 indicating an increase of 220.85% over a
period of 60 years. According to the 4th advance estimate the output of jute
and Mesta would be 9.91 lakh tons in 2019-20 which implies a decline of
6.69% over 2010-11.
The production of sugarcane increased from 57.05 lakh tons in 1950-51 to
342.38 lakh tons in 2010-11 indicating an increase of 500.14% over a
period of 60 years. According to the 4th advance estimate the output of
sugarcane would be 355.70 lakh tons in 2019-20 which implies an
increase of 3.89% over 2010-11.
The production of oilseeds increased from 5.16 lakh tons in 1950-51 to
32.48 lakh tons in 2010-11 indicating an increase of 529.45% over a
period of 60 years. According to the 4th advance estimate the output of
oilseeds would be 33.42 lakh tons in 2019-20 which implies an increase of
2.89% over 2010-11.
This table shows the three largest producing states of major corps.
Table:3 Three largest producing States of major Crops
during 2019-20
Groups Crops States Production* Share in All
of (Million tons) India
Crops Production
(%)
Food Rice West Bengal 15.57 13.15
Grains Uttar Pradesh 15.52 13.11
Punjab 11.78 9.95
All - India 118.43 100.00
Wheat Uttar Pradesh 32.59 30.29
Madhya Pradesh 19.61 18.22
Punjab 17.57 16.33
All - India 107.59 100.00
Maize Karnataka 3.96 13.84
Madhya Pradesh 3.91 13.65
Telangana 3.00 10.48
All - India 28.64 100.00

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 Total Rajasthan 7.29 15.35 History & Policies For
Nutri/ Karnataka 6.45 13.59 Agricultural Development In
Coarse Madhya Pradesh 4.82 10.16 India - I
Cereals All - India 47.48 100.00
Total Rajasthan 4.49 19.41
Pulses Maharashtra 4.03 17.40
Madhya Pradesh 3.80 16.41
All - India 23.15 100.00
Total Food Uttar Pradesh 55.03 18.55
grains Madhya Pradesh 33.03 11.13
Punjab 30.02 10.12
All - India 296.65 100.00
Oilseeds Groundnut Gujarat 4.64 45.99
Rajasthan 1.62 16.04
Tamilnadu 0.98 9.74
All - India 10.10 100.00
Rapeseed Rajasthan 4.22 46.28
& Mustard Haryana 1.15 12.61
Uttar Pradesh 0.96 10.50
All - India 9.12 100.00
Soybean Madhya Pradesh 5.15 45.90
Maharashtra 4.60 40.98
Rajasthan 0.52 4.68
All - India 11.22 100.00
Sunflower Karnataka 0.12 54.18
Odisha 0.03 12.11
Bihar 0.01 5.81
All - India 0.22 100.00
Total Rajasthan 6.79 20.30
Oilseeds Gujarat 6.66 19.94
Madhya Pradesh 6.57 19.66
All - India 33.42 100.00
Other Sugarcane Uttar Pradesh 178.42 50.16
Cash Maharashtra 64.67 18.18
Crops Karnataka 31.60 8.88
All - India 355.70 100.00
Cotton@ Gujarat 8.28 23.32
Telangana 6.83 19.25
Maharashtra 6.78 19.11
All - India 35.491 100.00
Jute & West Bengal 8.06 81.34
Mesta$ Bihar 0.86 8.67
Assam 0.77 7.78
All - India 9.91 100.00
Source: Directorate of Economics and Statistics
*Production Estimates are as per 4th Advance Estimates
@: Production in million bales of 170 kg. each.
$: Production in million bales of 180 kg. each.

7.2.3 Conclusion:
The above studies and the reports show the trends of food grains and non-
food grains products and these trends show the serious revolutionary
changes in productions is required in India if we want to achieve food
security and 2nd goal of sustainable development goal.

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Agricultural Development 7.3 NATIONAL FOOD POLICY IN INDIA
and Policy

The question of ‘food security has always been a big challenge for India,
the government has been continuously been addressing this issue since
quite a long time through its Public Distribution System and the Targeted
Public Distribution System. On 5th July 2013 the government enacted the
National Food Security Act, (NFSA), which depicted a change in the
pattern of the approach of food security from welfare-based approach to
rights-based approach. The Act entitles 50% of the urban population and
75% of the rural population to receive food grains at a subsidized rate
under the Targeted Public Distribution System. Nearly two thirds of the
population are covered by the Act to receive subsidized food grains. As
another step towards women empowerment, the eldest woman of the
household of 18 years of age or above will be mandated to be the head of
the family for the purpose of issuing of ration card under the Act.
This Act is being now implemented on all India basis in all the states and
union territories of the country. The maximum coverage of the population
under this Act is 81.34 crore and currently about 80 crore people under
being covered under NFSA receiving food grains at a highly subsidized
rate. The identification of the beneficiaries by the states and the union
territories is an ongoing process which includes excluding of ineligible,
fake and duplicate ration cards and exclusion due to death, migration etc
and inclusion on account of birth and those genuine people whose
households have been left out.
Life-cycle approach is one of the guiding principles of the Act wherein
special provisions have been made relating to pregnant ladies and lactating
mothers and children falling in the age group of 6 months to 14 years by
giving them a right to receive nutritious meal free of cost through
Integrated Child Development Services (ICDS) centres which has got a
very widespread network called Anganwadi Centres under ICDS scheme
and under Mid-Day Meal (MDM) scheme through schools. For under-
nourished children who are up to 6 years of age higher nutritional norms
have been prescribed. In order to partly compensate for the wage loss
during the period of pregnancy and also supplement nutrition pregnant
ladies and lactating mothers are further entitled to receive cash maternity
benefit of not less than Rs.6,000.
Under the provisions of the Food Security Allowance Rules 2015 in case
the entitled person under NFSA (National Food Security Act) does not
receive the entitled quantities of food grains or meals then such person
shall be entitled to receive such food security allowance from the
concerned State Government to be paid to each such person, within such a
time limit and manner as may be prescribed by the Central Government.

7.3.1 Responsibilities Under Nfsa (National Food Security Act):

NFSA has made both Central, State and Union Territory Governments
jointly responsible. While it is the responsibility of the Central
Government to allocate the required food grains to States and Union

133
Territories. The Central Government is also responsible to see to it that the History & Policies For
food grains are transported up to the designated depots in respective state Agricultural Development In
and union territory. It is also the responsibility of the Central Government India - I
to provide assistance to the state and union territory governments in
getting the food grains delivered from designated FCI warehouses to the
doorsteps of the FPSs (Fair Price Shops). The responsibilities of the state
and union territory governments include an effective implementation of
the Act, which among other things include identification of eligible
households, issuance of ration cards to them, distribution of food grain
entitlements to the eligible households through Fair Price Shops (FPSs),
issuing of licenses to the Fair Price Shop dealers and administering the
setting up of effective grievance redressal mechanism and strengthening of
Targeted Public Distribution System (TPDS).

7.3.2 Coverage and Entitlement Under Nfsa:

Up to 75% of the rural population and 50% of the urban population is
covered by NFSA under Antyodaya Anna Yojana (AAY), it also covers
priority households. The poorest of the poor households covered under
AAY are eligible to receive 35 Kgs of food grains per family per month.
Similarly, priority households are eligible to receive 5 Kgs of food grains
per person per month. As against the all India coverage of 75% in rural
areas and 50% in urban areas, the State wise coverage under NFSA was
decided by the former Planning Commission (now NITI Aayog) by using
the 2011-12 data of the NSS Household Consumption Survey. Within the
coverage under TPDS determined for each State, the work of identifying
the eligible households is to be done by the respective states and union
territories. The criteria for identification of the eligible priority households
and also their identification is the responsibility of the state governments
and union territories. According to the Section 10 of the Act the State
Government shall identify the households under AAY as per guidelines
applicable to the said scheme from the number of persons determined for
coverage under TPDS and the remaining households as priority
households to be covered under TPDS, in accordance with such guidelines
as the State Government TPDS may specify.

7.3.3 Central Issue Price Under Nfsa:

Rice, wheat and coarse grains were made available at a subsidized rate of
Rs3, Rs.2 and Re.1 per kg respectively under NFSA initially for a period
of 3 years from 13th July 2013 when this Act came into force. After that
the prices which never exceeded the MSP were revised by the Central
Government from time to time.

7.3.4 Tide Over Allocation:

According to the NFSA if the State or the Union Territories allocation is
less than the current allocation, then such a state or union territory will be
protected up to the level of average demand under previous normal TPDS
during 2010-11 to 2012-13, at prices as determined by the Central
Government. Under the previous TPDS prices for APL households were

134
Agricultural Development Rs.6.10 per kg for wheat and for rice it was Rs.8.30 per kg were the issue
and Policy price for additional allocation under Tide Over.

7.3.5 Direct Benefit Transfer (Dbt):

The main objective of National Food Security Act (2013) was to
restructuring the TPDS and other schemes like Cash Transfers for
providing food entitlement. In August 2015, the government enabled the
provisions under 12 of NFSA for cash transfer by notifying Cash Transfer
of Food Subsidy Rule 2015. The DBT aims at (a) reducing the huge
physical movement of food grains from one place to another (b) it
provides a greater freedom to the buyers / beneficiaries to buy the goods
of their own choice as per their consumption pattern (c) increases variety
in diet (d) reduces leakages (e) helps in better targeting (f) encourages
financial inclusion.
In September 2015 Direct Cash Transfer in food was simultaneously
started in the Union Territories of Chandigarh and Puducherry and in part
of Dadra & Nagar Haveli from March 2016. NFSA is being enforced in
these union territories in cash transfer mode where the cash equivalent
amount of subsidy is being directly transferred to the eligible households’
bank accounts to enable such households to buy food grains from the open
market. The implementation of the scheme is optional for the states and
union territories and a written consent of the concerned Government is
needed to implement the same. The current system of Public Distribution
System may continue to remain the in the areas which are not covered
under the scheme.

7.3.6 Power of Central Government to Make Rules:

Under Section 39(1) of NFSA, the Central Government may, in discussion
with the State Governments and by notice, make rules to carry out the
provisions of the Act. The following Rules have been notified by the
Central Government:
i. Provisioning of Funds to State Governments for Short Supply of
Foodgrains Rules, 2014.
ii. Food Security Allowance Rules, 2015.
iii. Food security (assistance to State Government Rules) 2015
iv. Cash Transfer of Food Subsidy Rules, 2015
v. Notification of WCD and HRD
Section 40 of the National Food Security Act provides that the State
Governments may, by notification and consistent with the Act and the
rules made by the Central Government, make rules to carry out the
provisions of this Act.

Check Progress:
1. Explain trend of Agricultural production in India.
135
2. Explain trends of Non-agricultural production in India. History & Policies For
Agricultural Development In
3. What do you understand by National food Policy in India? India - I

4. What do you understand by Direct Benefit Transfer?

7.4 AGRICULTURE POLICY

7.4.1 Overview of National Agriculture Policy 2000:
National Agriculture Policy was introduced on 28th July 2000. National
Agriculture Policy was essential to building the inherent strength of the
agriculture and allied sectors to address the constraints and make optimal
use of resources and opportunities emerging as a result of advancements in
science and technology and the emergence of a new economic regime.
The main aim of the National Agricultural Policy is to realize the huge
unexploited growth possibility of Indian Agriculture by developing rural
infrastructure which would accelerate the agricultural development and
growth of agri-businesses, promote value addition and generate
employment in the rural areas and secure a fair standard of living for the
farmers and agricultural labourers this in turn would lead to a reduction in
the migration of these workers to the urban areas. It aims to attain:
1. A growth rate in excess of four per cent annum in the agriculture
sector;
2. Growth that is based on efficient use of resources and conserves our
soil, water, and biodiversity;
3. Growth with equality, i.e., growth which is widespread across regions
and farmers.
4. Growth that is demand-driven and caters to domestic markets and
maximizes benefits from exports of agricultural products in the face
of the challenges arising from economic liberalization and
globalisation.
5. Growth that is can be maintained technologically, environmentally
and economically.

Objectives of National Agriculture Policy 2000:

1. Over 4 per cent annual growth rate aimed over the next twenty years.
2. Participation of the private sector by encouraging contract farming.
3. Price protection for farmers along with the launch of the National
agricultural insurance scheme to protect farmers in case crops are
destroyed.
4. Removing of restrictions on the movement of agricultural
commodities throughout the country.

136
Agricultural Development 5. Rational utilization of the country's water resources for optimum use
and Policy of irrigation potential.
6. High priority to the development of animal husbandry, poultry, dairy
and aquaculture.
7. Encouraging Capital inflow and ensuring that there are assured
markets for crop production.
8. Exemption from payment of capital gains tax on compulsory
acquisition of agricultural land.
9. Minimize fluctuations in commodity prices by taking necessary steps
and continuous international prices.
10. Plant varieties to be protected through legislation.
11. Adequate and timely supply of quality inputs to farmers.
12. High priority to rural electrification.
13. Setting up of agro-processing units and the creation of off-farm
employment in rural areas.

Issues Under Focus in Agriculture Policy 2000:

The plan that has been specified by the New Agricultural Policy (NAP),
2000, covers many serious issues of agriculture in the country so that the
targeted growth rate is achieved by maintaining sustainability and
impartiality at the same time. The main focus points are:
1. Sustainable agriculture: The policy will seek to promote technically
sound, economically viable, environmentally non-degrading, and
socially acceptable use of country’s natural resources-land, water and
genetic endowment to promote sustainable development of
agriculture. Balanced utilization and preservation of the country’s
plentiful water resources will be promoted.
The use of bio-technologies will be encouraged for developing plants
which consume less water, are drought resilient, pest resistant, contain
more nutrition, give better yields and are environmentally safe. There will
be a time bound programme to list, catalogue and classify country’s vast
agro bio-diversity.
From the above, it is clear that the climatic changes may affect agricultural
output adversely and bring about a food crisis in the country, along with
rising prices. As a plan to tackle this problem, the Government started the
National Mission for maintainable Agriculture suggesting certain
measures in crops and animal husbandry.
2. Food and nutritional security: Special efforts will be made to raise
the productivity and output of crops to meet the ever increasing
demand for food generated by increasing population and raw
materials for expanding agro-based industries. The strategy will take
137
 into account the climatic, environmental and agronomic conditions to History & Policies For
realize the full growth potential of every region. Agricultural Development In
India - I
Special consideration will be given to development of new crop varieties,
particularly of food crops, with higher nutritional value through adoption
of bio-technology particularly genetic modification, while addressing bio-
safety concerns.
It has been planned that a major push needs to be given to the raid
irrigated horticulture, plantation crops, roots, tubers, medicinal plants,
aromatic, bee keeping and sericulture in order to expand the food supply,
exports and to generate employment in the rural areas.
Animal husbandry and fisheries have also made their major contribution in
agricultural sector by generating considerable amount of both wealth as
well as employment. In an effort to diversify agriculture a priority will be
given to the development of animal husbandry, poultry farming, dairying
and aqua-culture. Steps will be taken to increase the animal protein
availability in food basket and also in generating exportable surpluses. The
national Food Security Mission was launched in 2007-08 in 311 districts
of 17 states with the following objectives: increase production of rice,
wheat and pulses through increase in area:
i. Sustainable increase in productivity by maintaining the fertility of the
soil and of the farms.
ii. Creation of employment opportunities.
iii. Increase farmer’s incomes to make them confident.
The plan is to involve the farmers and all other interested parties in
planning, organizing, executing and the monitoring process. The use of
latest and improved technology like seed, nutrients, plant protection, farm
machineries and tools, soil amendments and resource conservation.
3. Generation and transfer of technology: A very high priority will be
accorded to evolving new location-specific and economically viable
improved varieties of agricultural and horticultural crops, livestock
species. High priority will be given to the agricultural research based
on regions which will be identified on basis of agro-climatic zones.
4. Frontier sciences like bio-technology, remote sensing technologies,
pre and post-harvest technologies, energy saving technologies will be
used for environmental protection through national research system as
well as individual research will be encouraged. The endeavour will be
to build a well-organized, efficient and result-oriented agriculture
research and education system to introduce technological change in
Indian agriculture.
5. Inputs management: The government has made efforts for sufficient
and timely supply of raw materials like seeds, fertilizers, bio-
pesticides, agricultural tractors, and providing credit to farmers at a
reasonable rate of credit. Quality control measures like soil testing,
138
Agricultural Development fertilizer testing and seed testing will be done so as to see to it that a
and Policy proper quality of inputs is supplied and more importantly on timely
basis. These measures will ensure a proper use and optimum
utilization of fertilizers will be promoted together with use of organic
manures and bio-fertilizers to optimize the efficiency of nutrient use.
High priority will be given to development, production and distribution of
improved varieties of seeds and planting material and strengthening and
expansion of seed and plant certification system with private sector
participation.
In order to ensure supply of seeds especially to the areas affected by
natural calamities a National Seed Grid will be established. For the
development and strengthening of infrastructural facilities for production
and distribution of quality seeds The National Seeds Corporation (NSC)
and State Farms Corporation of India (SFCI) will be restructured was
launched in 10th Plan. The main aim of the Seed Bank is to provide quality
seeds to farmers in difficult times like famines and floods and not only this
but to also provide them with good storage facilities. The main aim of
SEED Village Scheme which is another important initiative and the New
seed policy aims to facilitate production and availability of seeds in time
in villages.
6. Incentives for agriculture: The government will take all necessary
steps in order to create an economic friendly environment for the
farmers which will enable the farmers to increase their capital
formation process and thereby increase their investment. The
government aims to remove the distortions in the incentive regime for
agriculture, and also improving terms of trade for the manufacturing
sector, by reforming both the external and domestic markets by
making domestic tax structure more business friendly.
The tax structure on food grain and other commercial crops needs to be
both reviewed as well as rationalized. Provisions in the tax laws will be
framed in such a manner so as to keep the agriculturists by and large out
of the tax collection system. Farmers need not pay any capital gain tax on
compulsory acquisition of agricultural land.
7. Investments in agriculture: Public investment for narrowing
regional imbalances, accelerating development of supportive
infrastructure for agriculture and rural development particularly rural
connectivity will be stepped up.
Institutional structure: Indian agriculture is characterized by prominence
of small and marginal farmers. Soon the institutional reforms will start to
channelize their programs in order to achieve greater productivity and
production. The rural development and land reforms will focus on the
areas like Consolidation of land holdings all over the country on the
design of north-western States.
Thus, redistribution of surplus lands and waste lands among the landless
farmers, unemployed persons. Tenancy reforms also take place to pursue
the right of tenants. Maintenance of land records, issuing and

139
computerization of land pass-books to the farmers and women’s right History & Policies For
recognition in land. The rural poor people will be involved in the Agricultural Development In
implementation of land reforms with the help of Panchayati Raj India - I
Institutions, Voluntary Groups, Social Activists and Community Leaders.

7.5 SUMMARY
The first unit explains the trends in production of food-grains and reveals
the remarkable increase in production of Rice, Wheat and other cereals
and in non-food grains item, we observe that there is a remarkable
increase in production of cash crops like sugarcane also. In India the main
largest agriculture producing states are Uttar-Pradesh, West-Bengal,
Punjab, Madhya-Pradesh etc.
National food policy in India was launched in July 2013, for fulfilling the
2nd goal of SDGs in which govt. has provided food-grains at subsidized
rate through targeted public distribution system to BPL people. In this act
govt. promotes various schemes like Antyoday Anna Yojana and Direct
Benefit Scheme etc.
First time in India, national agriculture policy 2000 was launched to
promote more productivity and bring about some institutional and
revolutionary changes in agriculture sector. Here, Govt. promoted public-
private partnership in agricultural sector.

7.6 QUESTIONS
1. Explain the trends in food-grain production since 1950s.
2. Explain the trends in non-food grain production since 1950s.
3. What do you understand by national food policy in India?
4. Explain the national agriculture policy 2000.
References: Pocket book of Agricultural Statistics 2020
https://nfsa.gov.in/portal/nfsa-act

*****

140
 8
HISTORY & POLICIES FOR
AGRICULTURAL DEVELOPMENT
IN INDIA - II
Unit Structure
8.0 Objectives
8.1 Introduction
8.2 Trends of Area and productivity in agriculture sector
8.3 Employment and wage rate analysis in agriculture sector
8.4 Trend’s in India’s Agriculture Export and Import And its implications
8.5 Summary
8.6 Questions

8.0 OBJECTIVES
 To know the trends of area and productivity status in India

 To know the Employment and wage rate analysis in agriculture sector

 To know the trends of Export and Imports in Indian agriculture

8.1 INTRODUCTION
Since the introduction of economic planning in India, agricultural
development has been receiving a special emphasis. It was only after
1965, i.e., from the mid-period of the Third Plan, special emphasis was
laid on the development of the agricultural sector. Since then, a huge
amount of fund was allocated for the development and modernization of
this agricultural sector every year. All these initiatives have led to:
1) A steady increase in areas under cultivation
2) A steady rise in agricultural productivity, and
3) A rising trend in agricultural production.

8.2 TRENDS IN AREA AND PRODUCTIVITY IN AGRICULTURE

SECTOR

In India the growth in gross area under all crops has increased from 124.78
million hectares in 2018-19 to 127.59 million hectares in 2019-20.
Further, gross area under all production has increased from 285.21 million
hectares in 2018-19 to 296.65 million hectares in 2019-20.

141
 Table 1: Area, Production and Yield of Food grains in Major History & Policies For
producing states Agricultural Development In
Area - Million Hectares India - II
Production - Million Tonnes
Yield - Kg. / Hectare
2019-20 # 2018-19
State Area % to Produ % to Yiel Area % to Produ % to Yield
All ction All d All ction All
India India India India
Uttar 19.59 15.35 55.03 18.55 2809 19.49 15.62 54.64 19.16 2803
Prade
sh
Madh 15.14 11.87 33.03 11.13 2182 16.35 13.11 32.21 11.29 1970
ya
Prade
sh
Punja 6.64 5.21 30.02 10.12 4519 6.77 5.42 31.53 11.06 4658
b
Rajast 15.81 12.39 23.18 7.81 1466 14.81 11.87 21.29 7.46 1437
han
West 6.44 5.05 18.26 6.16 2835 6.36 5.10 18.69 6.55 2938
Benga
l
Harya 4.59 3.60 17.86 6.02 3891 4.56 3.65 18.15 6.36 3981
na
Bihar 6.29 4.93 14.39 4.85 2286 6.50 5.21 15.60 5.47 2402
Maha 11.60 9.09 14.01 4.72 1208 9.62 7.71 10.30 3.61 1071
rashtr
a
Karna 7.77 6.09 12.58 4.24 1618 7.66 6.14 10.89 3.82 1422
taka
Andhr 4.12 3.23 12.50 4.21 3038 4.02 3.22 10.84 3.80 2694
a
Prade
sh
Tamil 3.69 2.89 11.04 3.72 2988 3.50 2.80 10.39 3.64 2972
Nadu
Telan 3.20 2.51 11.02 3.71 3447 3.06 2.45 9.28 3.25 3035
gana
Other 22.71 17.80 43.73 14.74 1926 22.08 17.70 41.41 14.52 1875
s
All 127.59 100.00 296.65 100.00 2325 124.78 100.00 285.21 100.00 2286
India

Source: Directorate of Economics & Statistics

Note: States have been arranged in descending order of percentage share

of production during 2019-20 # 4th Advance Estimates

Uttar Pradesh has the largest share of the cultivable land in India it stood
at 19.49 million hectares of land in 2018-19 which accounted for 15.62%
of the total cultivable land in India, the total agricultural output was 54.64
million tonnes and accounted for 19.16% of the total Indian agricultural
output, the land yield stood at 2803 kgs/hectare the area of cultivable land
rose to 19.59 million hectares of land, in 2019-20 and now accounted for
15.35% of the total cultivable land in India the total agricultural output
was 55.03 million tonnes which accounted for 18.55% of the total Indian
agricultural output, yield stood at 2809 kgs/hectare.

142
Agricultural Development Madhya Pradesh’s share of the cultivable land in India was 16.35 million
and Policy hectares of land in 2018-19 which accounted for 13.11% of the total
cultivable land in India, the total agricultural output was 32.21 million
tonnes and accounted for 11.29% of the total Indian agricultural output,
the land yield stood at 1970 kgs/hectare the area of cultivable land
declined to 15.14 million hectares of land in 2019-20 and now accounted
for 11.87% of the total cultivable land in India the total agricultural output
was 33.03 million tonnes which accounted for 11.13% of the total Indian
agricultural output, the yield stood at 2182 kgs/hectare.

Punjab’s share of the cultivable land in India was 6.77 million hectares of
land in 2018-19 which accounted for 5.42% of the total cultivable land in
India, the total agricultural output was 31.53 million tonnes and accounted
for 11.06% of the total Indian agricultural output, the land yield stood at
4658 kgs/hectare the area of cultivable land declined to 6.64 million
hectares of land in 2019-20 and now accounted for 5.21% of the total
cultivable land in India the total agricultural output was 30.02 million
tonnes which accounted for 10.12% of the total Indian agricultural output,
the yield stood at 4519 kgs/hectare.

Rajasthan’s share of the cultivable land in India was 14.81 million

hectares of land in 2018- 19 which accounted for 11.87% of the total
cultivable land in India, the total agricultural output was 21.29 million
tonnes and accounted for 7.46% of the total Indian agricultural output, the
land yield stood at 1437 kgs/hectare the area of cultivable land rose to
15.81 million hectares of land in 2019-20 and now accounted for 12.39%
of the total cultivable land in India the total agricultural output was 23.18
million tonnes which accounted for 7.81% of the total Indian agricultural
output, the yield stood at 1466 kgs/hectare.

West Bengal’s share of the cultivable land in India was 6.36 million
hectares of land in 2018- 19 which accounted for 5.1% of the total
cultivable land in India, the total agricultural output was 18.69 million
tonnes and accounted for 6.55% of the total Indian agricultural output, the
land yield stood at 2938 kgs/hectare the area of cultivable land rose to 6.44
million hectares of land in 2019-20 and now accounted for 5.05% of the
total cultivable land in India the total agricultural output was 18.26 million
tonnes which accounted for 6.16% of the total Indian agricultural output,
the yield stood at 2835 kgs/hectare.

Haryana’s share of the cultivable land in India was 4.56 million hectares
of land in 2018-19 which accounted for 3.65% of the total cultivable land
in India, the total agricultural output was 18.15 million tonnes and
accounted for 6.36% of the total Indian agricultural output, the land yield
stood at 3981 kgs/hectare the area of cultivable land rose to 4.59 million
hectares of land in 2019-20 and now accounted for 3.6% of the total
cultivable land in India the total agricultural output was 17.86 million
tonnes which accounted for 6.02% of the total Indian agricultural output,
the yield stood at 3891 kgs/hectare.

143
Bihar’s share of the cultivable land in India was 6.5 million hectares of History & Policies For
land in 2018 19 which accounted for 5.21% of the total cultivable land in Agricultural Development In
India, the total agricultural output was 15.6 million tonnes and accounted India - II
for 5.47% of the total Indian agricultural output, the land yield stood at
2402 kgs/hectare the area of cultivable land decline to 6.29 million
hectares of land in 2019-20 and now accounted for 4.93% of the total
cultivable land in India the total agricultural output was 14.39 million
tonnes which accounted for 4.85% of the total Indian agricultural output,
the yield stood at 2286 kgs/hectare.

Maharashtra’s share of the cultivable land in India was 9.62 million

hectares of land in 2018-19 which accounted for 7.71% of the total
cultivable land in India, the total agricultural output was 10.3 million
tonnes and accounted for 3.61% of the total Indian agricultural output, the
land yield stood at 1071 kgs/hectare the area of cultivable land rose to 11.6
million hectares of land in 2019-20 and now accounted for 9.09% of the
total cultivable land in India the total agricultural output was 14.01 million
tonnes which accounted for 4.72% of the total Indian agricultural output,
the yield stood at 1208 kgs/hectare.

Karnataka’s share of the cultivable land in India was 7.66 million hectares
of land in 2018-19 which accounted for 6.14% of the total cultivable land
in India, the total agricultural output was 10.89 million tonnes and
accounted for 3.82% of the total Indian agricultural output, the land yield
stood at 1422 kgs/hectare the area of cultivable land rose to 7.77 million
hectares of land in 2019-20 and now accounted for 6.09% of the total
cultivable land in India the total agricultural output was 12.58 million
tonnes which accounted for 4.24% of the total Indian agricultural output,
the yield stood at 1618 kgs/hectare.

Andhra Pradesh’s share of the cultivable land in India was 4.02 million
hectares of land in 2018-19 which accounted for 3.22% of the total
cultivable land in India, the total agricultural output was 10.84 million
tonnes and accounted for 3.8% of the total Indian agricultural output, the
land yield stood at 2694 kgs/hectare the area of cultivable land rose to 4.12
million hectares of land in 2019-20 and now accounted for 3.23% of the
total cultivable land in India the total agricultural output was 12.50 million
tonnes which accounted for 4.21% of the total Indian agricultural output,
the yield stood at 3038 kgs/hectare.

Tamil Nadu’s share of the cultivable land in India was 3.5 million hectares
of land in 2018-19 which accounted for 2.8% of the total cultivable land in
India, the total agricultural output was 10.39 million tonnes and accounted
for 3.64% of the total Indian agricultural output, the land yield stood at
2972 kgs/hectare the area of cultivable land rose to 3.69 million hectares
of land in 2019-20 and now accounted for 2.89% of the total cultivable
land in India the total agricultural output was 11.04 million tonnes which
accounted for 3.72% of the total Indian agricultural output, the yield stood
at 2988 kgs/hectare.

144
Agricultural Development Telangana’s share of the cultivable land in India was 3.06 million hectares
and Policy of land in 2018-19 which accounted for 2.45% of the total cultivable land
in India, the total agricultural output was 9.28 million tonnes and
accounted for 3.25% of the total Indian agricultural output, the land yield
stood at 3035 kgs/hectare the area of cultivable land rose to 3.2 million
hectares of land in 2019-20 and now accounted for 2.51% of the total
cultivable land in India the total agricultural output was 11.02 million
tonnes which accounted for 3.71% of the total Indian agricultural output,
the yield stood at 3447 kgs/hectare.

Rest Of India’s share of the cultivable land in India was 22.08 million
hectares of land in 2018-19 which accounted for 17.70% of the total
cultivable land in India, the total agricultural output was 41.41 million
tonnes and accounted for 14.52% of the total Indian agricultural output,
the land yield stood at 1875 kgs/hectare the area of cultivable land rose to
22.71 million hectares of land in 2019-20 and now accounted for 17.80%
of the total cultivable land in India the total agricultural output was 43.73
million tonnes which accounted for 14.74% of the total Indian agricultural
output, the yield stood at 1926 kgs/hectare.

The area under coverage changes from season to season and there are no
fixed areas under which the crops are cultivated. However, there is a
normal area coverage which is average of the data of many years. The
following table shows the average area under cultivation for both Rabi &
Kharif Crops.

Table: 2 Year wise Area Under Major Crops

(Million Hectares)
Crops Rice Wheat Nutri Pulses Food Oilseeds Sugarcane Cotton Jute
Cereals grains &
Year Mesta
1950- 30.81 9.75 37.67 19.09 97.32 10.73 1.71 5.88 0.57
51
1960- 34.13 12.93 44.96 23.56 115.58 13.77 2.42 7.61 0.90
61
1970- 37.59 18.24 45.95 22.54 124.32 16.64 2.62 7.61 1.08
71
1980- 40.15 22.28 41.78 22.46 126.67 17.60 2.67 7.82 1.30
81
1990- 42.69 24.17 36.32 24.66 127.84 24.15 3.69 7.44 1.02
91
2000- 44.71 25.73 30.26 20.35 121.05 22.77 4.32 8.53 1.02
01
2010- 42.86 29.07 28.34 26.40 126.67 27.22 4.88 11.24 0.87
11
2011- 44.01 29.86 26.42 24.46 124.75 26.31 5.04 12.18 0.90
12
2012- 42.75 30.00 24.76 23.26 120.78 26.48 5.00 11.98 0.86
13
2013- 44.14 30.47 25.22 25.21 125.05 28.05 4.99 11.96 0.84
14
2014- 44.11 31.47 25.17 23.55 124.30 25.60 5.07 12.82 0.81
15
2015- 43.50 30.42 24.39 24.91 123.22 26.09 4.93 12.29 0.78
16
2016- 43.99 30.79 25.01 29.45 129.23 26.08 4.44 10.83 0.76
17

145
2017- 43.77 29.65 24.29 29.81 127.52 24.51 4.74 12.59 0.74 History & Policies For
18
Agricultural Development In
2018- 44.16 29.32 22.15 29.16 124.83 24.79 5.06 12.57 0.70
19
India - II
2019- 43.78 31.45 24.02 28.34 127.59 27.04 4.57 13.37 0.68
20*

Source: Directorate of Economics & Statistics

* 4th Advance Estimates

Area under rice cultivation has shown a consistent uptrend in the initial
years when it increased from 30.81 million hectares in 1950-51 to 34.13
million hectares in 1960-61 showing an increase of 10.78% over a period
of one decade. It further increased to 37.39 in 1970-71 recording an
increase of 9.55%, the uptrend continued in the decade ending 1980-
81when the area under rice cultivation went up to 40.15 million hectares
registering a growth of 7.38% from 1970-71 to 1980-81. This cultivation
area increased to 42.69 million hectares in 1990-91 recording a growth
rate of 6.33% as compared to 1980-81. During 2000-01the total area under
rice cultivation was 44.71 million hectares showing an increase in the
cultivation area by 4.73%. The rice cultivation area registered a first
decrease in 2010-11 when the cultivation area dropped to 42.86 million
hectares registering a decrease in the cultivation area of 4.14%. During
2011-12 the rice cultivation area was 44.01 it dropped down to 42.75 in
the year 2012-13. In the year 2013-14 there was a rise in the rice
cultivation area and was 44.14 million hectares, there was a marginal dip
in the year 2014-15 and land under rice cultivation was 44.11 million
hectares. In the year 2015-16 there was a further dip in the rice cultivation
area and it was 43.50 million hectares it rose to 43.99 million hectares in
2016-17. In 2017-18 it dipped down to 43.77 million hectares though there
was an increase in the cultivation area in 2018-19 which was 44.16 million
hectares. While according to 4th advanced estimates for 2019-20 it is
expected to be 43.78 million hectares.

In the year 1950-51the total area under wheat cultivation was 9.75 million
hectares which grew to 12.93 million hectares recording a growth of
32.61%. This area, under wheat cultivation further went up to 18.24
million hectares in 1970-71 showing a growth of 41.06% from 1960-61 to
1970-71. Wheat cultivation area increased to 22.28 million hectares in
1980-81 registering a growth of 22.15% from 1970-71 to 1980-81. The
wheat cultivation area rose to 24.17 million hectares in 1990-91 showing
an uptrend of 9.12%. The area under wheat cultivation increased to 25.73
million hectares growing at a rate of 6.45%. In 2010-11 the wheat
cultivation area was 29.07 million hectares increasing at a rate of 12.98%.
In 2011-12 the cultivation area for wheat was 29.86 million hectares, it
touched a figure of 30 million hectares in 2012-13. The cultivation area
for wheat in 2013-14 was 30.47 million hectares and touched 31.47
million hectares in 2014-15. However, there was a drop in the wheat
cultivation area in 2015-16 when it was 30.42 million hectares. In 2016-17
it was 30.79 hectares and dropped down to 29.65 million hectares in 2017-
18 it dropped down further to 29.32 million hectares in 2018-19 and

146
Agricultural Development according to 4th advance estimates cultivation area under wheat was 31.45
and Policy million hectares.

The area under nutri-cereals cultivation was 37.67 million hectares in

1950-51 it increased to 44.96 million hectares in 1960-61 registering a
growth of 19.35%, the area under nutri-cereals increased marginally to
45.95 million hectares between 1960-61 to 1970-71 showing a growth rate
of 2.20%. Between 1970-71 to 1980-81 there was a decline in the
cultivation area of nutri-cereals and area under cultivation stood at 41.78
million hectares registering a decline of 9.07%. In 1990-91 the cultivation
land under nutri-cereals was 36.32 million hectares showing a decline of
13.07% from 1980-81 level. The land under nutri-cereals cultivation in
2000-01, was 30.26 million hectares recording a fall in the cultivation area
of nutri-cereals of 16.69%. In 2010-11 the cultivation area under nutri-
cereals declined further to 28.34 million hectares indicating a decline of
6.35%. In 2011-12 the area under nutri-cereals cultivation further fell
down to 26.42 million hectares, this downward trend continued in 2012-13
as well and the cultivation area got reduced to 24.76 million hectares.
During 2013-14 it touched a low of 25.22 million hectares which further
slide down to 25.17 million hectares in 2014-15 and to 24.39 million
hectares in 2015-16. In the year 2016-17 it showed a marginal recovery
and 25.01 million hectares. However, the downside continued in 2017-18
when it was 24.29 million hectares and touched an all-time low in 2018-19
and was at 22.15 million hectares. According to the 4th advance estimates
in 2019-20 the cultivation area under nutri-cereals would be 24.02 million
hectares.

Area under pulse cultivation in 1950-51 was 19.09 million hectares, this
area increased to 23.56 million hectares in 1960-61 showing a growth rate
of 23.41%. In 1970-71 the pulse cultivation area was 22.54 million
hectares, indicating a decline of 4.33% as compared to 1960-61. The pulse
cultivation area in 1980-81 was 22.46 million hectares again showing a
marginal decline of 0.35%. However, this area increased to 24.66 million
hectares in 1990-91 registering a growth of 9.79%. In 2000-01 the area
under pulse cultivation dropped significantly to 20.35 million hectares,
representing a considerable decline of 17.48%, however during the period
2000-01 to 2010-11the cultivation area should some appreciable increase
and was 26.40 million hectares in 2010-11 scripting an increase of 29.73%
as compared to 2000-01. There was a decline in the cultivation areas for
two consecutive years that is 2011-12 and 2012-13 and the cultivable land
figures stood at 24.46 million hectares and 23.26 million hectares
respectively. In 2013-14 the cultivation area increased and was 25.21
million hectares, in 2014-15 the cultivation area stood at 23.55 million
hectares. In the year 2015-16 the area under pulse cultivation jumped to
24.91 million hectares and this upsurge continued in 2016-17 as well when
the area under pulse cultivation touched 29.45 million hectares. In 2017-
18 it was touching a figure of 29.81 million hectares it dropped a little in
2018-19 and was 29.18 million hectares. According to 4th advance
estimates in 2019-20 the total area under pulse cultivation will be 28.34
million hectares.

147
Area under food grain cultivation was 97.32 million hectares in 1950-51 History & Policies For
which when compared to 2010-11 has gone up to 126.67 million hectares Agricultural Development In
indicating a growth rate of 30.15% over a period of 60 years. According to India - II
the 4th estimates the cultivation area for food grain would be 127.59
million hectares indicating a growth rate of 0.73% from 2010-11 to 2019-
20.

Area under oilseed cultivation increased from 10.73 million hectares in

1950-51 to 27.22 million hectares in 2010-11 indicating a growth rate of
153.68% spread over a six decades. According to 4th advance estimates
the cultivation area for oilseeds would be 27.04 which indicates a decline
in the cultivation area of 0.66% over a period from 2010-11 to 2019-20.

Area under sugarcane cultivation rose from 1.71 million hectares in 1950-
51 to 4.88 million hectares in 2010-11indicating a growth rate of 185.38%
over a period of 60 years. According to the 4th advance estimates the area
under sugarcane cultivation would be 4.57 million hectares in 2019-20
which indicates a 6.35% decline in the cultivation area for sugarcane as
compared to 2010-11.

Area under cotton cultivation rose from 5.88 million hectares in 1950-51
to 11.24 million hectares in 2010-11 indicating an increase of 91.15% over
a period of 60 years. As per the 4th advance estimates the area under
cotton cultivation would be 13.37 million hectares in 2019-20 indicating
an increase of 18.95% as compared to 2010-11.

Area under jute and Mesta cultivation was 0.87 million hectares in 2010-
11 as compared to 0.57 million hectares in 1950-51 indicating an increase
of 52.63% over a period of 60 years. As per 4th advance estimates jute and
Mesta cultivation area would be 0.68 million hectares in 2019-20
indicating a decline of land under jute and Mesta cultivation by 21.84% as
compared to 2010-11. We can also show distribution of Area under major
crops in per centage given following table.

148
Agricultural Development Table: 3 Distribution of Area under major Crops
and Policy
(Figures in Percentage)
Year Rice Wheat Nutri Pulses Food Oilsee Sugar Cotton Others All
Cereals grains ds cane Crops
2007- 23.31 14.88 15.12 12.54 65.85 14.17 2.68 5.00 12.30 100.00
08
2008- 24.17 14.73 14.57 11.73 65.19 14.63 2.34 4.99 12.85 100.00
09
2009- 22.59 15.33 14.91 12.55 65.38 13.99 2.25 5.46 12.93 100.00
10
2010- 21.85 14.82 14.44 13.46 64.56 13.88 2.49 5.73 13.35 100.00
11
2011- 22.48 15.25 13.50 12.50 63.72 13.44 2.57 6.22 14.05 100.00
12
2012- 22.13 15.52 12.82 12.04 62.51 13.71 2.59 6.20 15.00 100.00
13
2013- 22.07 15.24 12.61 12.61 62.54 14.03 2.50 5.98 14.95 100.00
14
2014- 22.29 15.90 12.72 11.90 62.80 12.93 2.56 6.48 15.23 100.00
15
2015- 22.01 15.45 12.39 12.66 62.60 13.25 2.50 6.24 15.40 100.00
16
2016- 22.19 15.53 12.62 14.85 65.19 13.21 2.24 5.46 13.90 100.00
17
2017- 22.07 14.95 12.25 15.03 64.31 12.36 2.39 6.35 14.60 100.00
18
2018- 23.01 15.28 11.54 15.19 65.01 12.92 2.64 6.57 12.86 100.00
19
2019- 22.06 15.85 12.11 14.28 64.30 13.62 2.30 6.74 13.04 100.00
20

Source: Directorate of Economics & Statistics

Notes:
(1) Area estimates are based on data provided by State Statistical
Authorities (SASAs) which is further cross checked and validated
with estimates provided by other agencies, viz., MNCFC and
CWWG.
(2) Others include Jute & Mesta, Coconut, major Horticulture crops,
Tea, Coffee and Rubber
(3) Data for Food grains, Oilseeds and Commercial Crops are as per 4th
Advance Estimates for 2019-20
(4) Data for Horticulture crops are as per 3rd Advance Estimates for
2019-20
This table has revealed distribution of area under major crops of food-
grain items and non-food grain items. In 2007-08 65.85% area is used for
cultivation of food grains which includes Rice, Wheat, Nutri-Cereals,
Pulses further it declines 64.03% area used for cultivation purpose due to
(i) There has been a gradual shift from cultivation of food crops to
cultivation of cash crops, fruits vegetable, etc. (ii) Area under food crop
has reduced due to rapid urbanisation. (iii) More areas are being demanded
for housing, setting up industries. ... Monsoon is still vital for food
production.

149
Non-food grain production area is increased by 34.15% area in 2007-08 to History & Policies For
35.7 % area in 2019-20. It shows Indian agriculture gradually shift from Agricultural Development In
cultivation of food crops to cultivation of cash crops, fruits and vegetables India - II
etc.

8.2.1 Conclusions:
Uttar Pradesh has the largest share of cultivable land in India and it has
been distributed unevenly. Thus, Govt. have to pay attention towards the
production of other crops and cash crop produced in largest area to get
more revenue from agriculture even though India has self-sufficient in
production of rice and wheat but area under cultivation of other crops like
pulses and edible oil are also very important and have to gain self-
sufficiency in these products.

8.3 EMPLOYMENT AND WAGE RATE ANALYSIS IN

AGRICULTURE SECTOR
Agriculture has been associated with mankind since its very inception,
cultivation and growing of crops has been a very powerful instrument in
growth and development of mankind from small villages to well
developed countries. Its complex relation with our daily lives has been the
major attention seeker of the policymakers and media. A lot of economic
factors have their impact on the prices of the agricultural products and
wages of the agricultural labourers is one of them.
Table: 4 Population and Agricultural Workers
In Million
Year Total Rural Total Agricultural Workers
Population Population Workers
Cultivators Agricultural Total
Labourers
1951 361.1 298.6 (82.7) 139.5 69.9 (71.9) 27.3 (28.1) 97.2(69.7)
1961 439.2 360.3 (82.0) 188.7 99.6 (76.0) 31.5 (24.0) 131.1 (69.5)
1971 548.2 439.0 (80.1) 180.4 78.2 (62.2) 47.5 (37.8) 125.7 (69.7)
1981 683.3 252.5 (76.9) 244.6 92.5 (62.5) 55.5 (37.5) 148.0 (60.5)
1991 846.4 628.7 (74.5) 314.1 110.7 (59.7) 74.6 (40.3) 185.3 (59.0)

2001 1028.7 742.5 (72.2) 402.2 127.3 (54.4) 106.8 (45.6) 234.1 (58.2)

2011 1210.9 833.7 (68.9) 481.9 118.8 (45.1) 144.3 (54.9) 263.1 (54.6)

Source: Registrar General of India

If we have a look at the above table, we find that in 1951 when the total
population of India was 361.1 million, 298.6 million or 82.7% of the total
population lived in the rural areas. Out of the total population of 361.1
million, our workforce was 139.5 million or 38.63% of the population was
working population and out of the total working population of 139.5
million, 97.2 million or 69.67% of the workforce was employed in
agriculture.
According to 1961 census out of the total population of 439.2 million,
360.3 million or 82% of the total population lived in the rural areas. Out of

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Agricultural Development the total population of 439.2 million our workforce was 188.7 million or
and Policy 42.96% of the population was working population and out of the total
working population of 188.7 million, 131.1 million or 69.47% of the
workforce was employed in agriculture.
According to 1971 census out of the total population of 548.2 million,
439.0 million or 80.1% of the total population lived in the rural areas. Out
of the total population of 548.2 million our workforce was 180.4 million
or 32.90% of the population was working population and out of the total
working population of 180.4 million, 125.7 million or 69.7% of the
workforce was employed in agriculture.
According to 1981 census out of the total population of 683.3 million,
252.5 million or 76.9% of the total population lived in the rural areas, here
for the first time we saw the percentage of rural population falling below
80%. Out of the total population of 683.3 million our workforce was 244.6
million or 35.79% of the population was working population and out of
the total working population of 244.6 million, 148.0 million or 60.5% of
the workforce was employed in agriculture. Here again due to a fall in the
percentage of the rural population, we for the first time saw a decline of
nearly 10% in the workforce depending on agriculture as their main
occupation.
According to 1991 census out of the total population of 846.4 million,
628.7 million or 74.5% of the total population lived in the rural areas, here
again we saw the percentage of rural population falling further down to
74.5% from earlier level of 76.9% in 1981. Out of the total population of
846.4 million our workforce was 314.1 million or 37.11% of the
population was working population and out of the total working
population of 314.1 million, 185.3 million or 59.0% of the workforce was
employed in agriculture. Here again there was a marginal fall in the
percentage of the rural population, we saw a decline of nearly 1.5% in the
workforce depending on agriculture as their main occupation.
According to 2001 census out of the total population of 1028.7 million,
742.5 million or 72.2% of the total population lived in the rural areas, here
again we saw the percentage of rural population falling further down to
72.2% from earlier level of 74.5% in 1991. Out of the total population of
1028.7 million our workforce was 402.2 million or 39.09% of the
population was working population and out of the total working
population of 402.2 million, 234.1 million or 58.2% of the workforce was
employed in agriculture. Here again there was a marginal fall in the
percentage of the rural population, we saw a decline of nearly 1% in the
workforce depending on agriculture as their main occupation.
According to 2011 census out of the total population of 1210.9 million,
833.7 million or 68.9% of the total population lived in the rural areas, here
again we saw the percentage of rural population falling further down to
68.9% from earlier level of 72.2% in 2001. Out of the total population of
1210.9 million our workforce was 481.9 million or 39.79% of the
population was working population and out of the total working

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population of 481.9 million, 263.1 million or 54.6% of the workforce was History & Policies For
employed in agriculture. Here again there was a 3.3% fall in the Agricultural Development In
percentage of the rural population, we saw a decline of nearly 3.6% in the India - II
workforce depending on agriculture as their main occupation.
Table 5: All India Annual Average Daily Wage Rate of Field
Labourers

Year Wages (Rs.)

Male Female
2007-08 91 70
2008-09 108 82
2009-10 124 95
2010-11 149 115
2011-12 183 134
2012-13 214 158
2013-14 229 177
2014-15 263 200
2015-16 283 219
2016-17 294 230
2017-18 314 243
2018-19 330 265
Source: Directorate of Economics & Statistics
Note 1. All India annual average is calculated for 21 major States.
Average Daily Wage is taken as average of five major agricultural
operations, including ploughing sowing, weeding, reaping and harvesting.

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Agricultural Development The above table shows annual average daily wage rate of field workers
and Policy both male workers as well as female workers for the period from 2007-08
to 2018-19. Though we see a gradual increase in the annual average daily
wage rate for both male as well as female workers, the rate of increase
may not match the inflation rate and in real terms there may have been a
decline in the wage rate.
First, if we look at the annual growth rate in the annual average daily wage
rate of male workers it rose from 91 to 108 from 2007-08 to 2008-09
which implies a growth rate of 18.68%. Their wages rose from 108 in
2008-09 to 124 in 2009-10 which comes to a growth rate of 14.81%, this
wage rate further went up to 149 in 2010-11 showing a growth rate of
20.16% these wage level further rose to 183 in 2011-12 growing at a rate
of 22.81% over the previous year. The wage rate rose to 214 in 2012-13
and recorded a growth rate of 16.93%, during 2013-14 the wage rate was
229 recording a growth of just 7%. During 2014-15 the wage rate was 263
registering a growth of 14.85%, in 2015-16 the wage rate went up to 283
indicating a growth rate of 7.6%, in 20016-17 the wage rate was 294
increasing at a rate of as low as 3.88%. The wage rate during 2017-18 was
314 depicting a growth rate of 6.8%, in 2018-19 the wage rate was 330
showing a growth rate of just 5.09%.
If we analyse the above movement in the wage rate, we find that there has
been a consistent low annual average wage rate among male workers once
it dropped to a single digit growth rate in 2016-17.
Now, if we look at the annual growth rate in the annual average daily
wage rate of female workers it rose from 70 in 2007-08 to 82 in 2008-09
which implies a growth rate of 17.14%. Their wages rose from 82 in 2008-
09 to 95 in 2009-10 which comes to a growth rate of 15.85%, this wage
rate further went up to 115 in 2010-11showing a growth rate of 21.05%
these wage level further rose to 134 in 2011-12 growing at a rate of
16.52% over the previous year. The wage rate rose to 158 in 2012-13 and
recorded a growth rate of 17.91%, during 2013-14 the wage rate was 177
recording a growth rate of 12.02%. During 2014-15 the wage rate was 200
registering a growth of 13%, in 2015-16 the wage rate went up to 219
indicating a growth rate of 9.5%, in 2016-17 the wage rate was 230
increasing at a rate of as low as 5.02%. The wage rate during 2017-18 was
243 depicting a growth rate of 5.65%, in 2018-19 the wage rate was 265
showing a growth rate of 9%.
If we analyse the above movement in the wage rate, we find that there has
been a consistent low annual average wage rate among male workers once
it dropped to a single digit growth rate in 2015-16.

8.4 TREND’S IN INDIA’S AGRICULTURE EXPORT

AND IMPORT AND ITS IMPLICATIONS
The Indian agricultural exports have shown a steady growth of nearly 7
times over a period of last 15 years while the agricultural imports growth
of nearly 8 times during the same period. India is one of largest producers

153
of many agricultural products like wheat, rice, cotton to name a few. History & Policies For
During the pandemic proper guidelines were issued to ensure smooth Agricultural Development In
functioning of the agriculture sector. Though there was a considerable India - II
improvement in the food grain production during the pandemic and even
the exports of the agricultural products increased.
Table 6: Year-wise Imports and Exports of Principal Agricultural
Commodities

Year Agricultur Total Share of Agricultur Total Share of

al Imports Imports Agricultur al Exports Exports Agricultural
al Imports Exports in Total
in Total Exports (%)
Imports
(%)
1990-91 1205.86 43170.82 2.79 6012.76 32527.28 18.49
2000-01 12086.23 228306.64 5.29 28657.37 201356.45 14.23
2010-11 51073.97 1683466.96 3.03 113046.58 1136964.25 9.94
2011-12 70164.51 2345463.23 2.99 182801.00 1465959.39 12.47
2012-13 95718.89 2669161.95 3.59 227192.61 1634318.28 13.90
2013-14 85727.30 2715420.78 3.16 262778.54 1905011.08 13.79
2014-15 121319.02 2736676.99 4.43 239681.04 1896348.42 12.64
2015-16 140289.22 2490303.76 5.63 215396.32 1716384.39 12.55
2016-17 164726.83 2577671.14 6.39 226651.91 1849433.55 12.26
2017-18 152095.20 3001028.71 5.07 251563.94 1956514.52 12.86
2018-19 137019.46 3594674.22 3.81 274571.28 2307726.19 11.90
2019-20 147445.81 3360954.45 4.39 252976.06 2219854.17 11.40
(P)
(Value in Rs. crore)
Source: Directorate General of Commercial Intelligence & Statistics, D/o
Commerce. (P) – Provisional

In 1990-91 the agricultural exports formed 18.49% of the total Indian

exports. This percentage came down to 14.23% in 2000-01 it further
dropped to 9.94% in 2010-11this down fall indicated a shift of our
economy from an agro-based economy towards more secondary sector and
tertiary sector-oriented economy. However, this percentage rose again to
12.47% in 2011-12 and rose again to 13.9% in 2012-13. The agricultural
exports formed 13.79% of the total exports in 2013-14 this percentage

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Agricultural Development took a dip in the year 2014-15 and it stood at 12.64% it further came down
and Policy to 12.55% in 2015-16.
In 1900-91 agricultural imports formed 2.79% of the total imports of India
this percentage increased to 5.29% in 2000-01. During 2010-11 the
agricultural imports dropped down to 3.03% it was 2.99% in the year
2011-12. The agricultural imports share rose gradually and stood at 3.59%
in 2012-13 of the total imports of the country. In 2013-14 the percentage
of the agricultural imports to that of total imports dropped down
marginally to 3.16%. It went up sharply to 4.43% in 2014-15 it took
another substantial jump to touch a figure of 5.63% of the total imports in
the year 2015-16. In the year 2016-17 there was another increase in the
percentage of agricultural imports to the total imports and it stood at
6.39% of the total imports. This rampant increase in the share of the
agricultural imports to that of the total imports was arrested in 2017-18
when the agricultural imports formed 5.07% of the total imports of the
country. In 2018-19 there was a further reduction in the percentage of the
agricultural imports which came down to 3.81% of the total imports of the
nation. According to the provisions the percentage of the agricultural
imports to that of the total imports is likely to be 4.39%.

Implication of Agricultural Export and Import Goods:

1. Export of wheat increased by over 7 times in 2020-21:
The main drivers of the increase in exports in 2020-21 are wheat (672%
increase), vegetable oil (258%), other cereals (245%), molasses (141%)
and non-Basmati rice (132%). Marine products, Basmati Rice, Non-
Basmati Rice, Spices, and Buffalo meat were among the top five
commodities to be exported, in terms of value, both in 2019-20 and 2020-
21. Together, these five products accounted for almost 57% of agriculture
exports in the first 11 months of 2019-20 and 54% of the exports during
the same period in 2020-21. In rupee terms, Marine products are the most
exported with over Rs. 40,140 crores worth exports in 2020-21. However,
their exports have dropped by 10.18% in 2020-21, compared to Rs.
44691.44 worth marine exports in 2019-20. The exports of Basmati rice
have also slightly dropped by 2% in the first 11 months of 2020-21.
2. Vegetable oils constitute more than half the import of agriculture
products in India:
About 54% or more than half the agri-imports by India is of vegetable oils.
India’s vegetable oil imports in 2020-21, up to February 2021, are worth
Rs. 74,286 crores. Other major agri-imports are fresh fruits, pulses, spices,
and cashew. Together, the five products account for 80% of India’s agri-
imports.
In the case of other commodities, there is a growth in India’s sugar
imports in 2020-21 by 88%. Import of other oil seeds grew by 72%,
marine products by 25%, pulses by 19%, and fresh fruits by 11%.
However, this increase was neutralized by the drop in imports of raw
cotton (72%), Non-Basmati rice (71%), other cereals (69%), spices (24%),
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oil meals (26%), alcoholic beverages (19%), miscellaneous processed History & Policies For
items (18%), and cashew (17%). Agricultural Development In
India - II
3. Demand for various products has increased:
India also exports fresh and processed food to more than 100 countries
across the world. The increase in exports has been attributed to the
increased demand from other countries. Following specific demand,
NAFED exported 50,000 MT wheat to Afghanistan and 40,000 MT wheat
to Lebanon under the G2G arrangement. Similarly, the increased export of
rice is due to exports to countries such as Timor-Leste, Papua New
Guinea, Brazil, Chile, Puerto Rico, Togo, Senegal, Malaysia, Madagascar,
Iraq, Bangladesh, Mozambique, Vietnam, Tanzania Republic, and
Madagascar. There was also an increase in demand for Pulses, Processed
fruits and vegetables, cereals preparations, and other items from the
Middle East, Far East, USA, and UK markets.

4. APEDA supervises agriculture exports in India:

Agricultural and Processed Food Products Export Development Authority
(APEDA) is responsible for the export promotion and development of
listed products including meat products, dairy products, floriculture
products, horticulture, medicinal plants, etc. It plays an important role in
strengthening India’s export potential along with encouraging better price
realization.
Some of the actions taken by APEDA to boost agriculture exports during
the pandemic include promotion in virtual buyer-seller meets, formation of
products specific export promotion forums, hosting product promotion
meetings and webinars regularly for understanding problems, and
resolving them, and promotion of GI products, among others. Under the
Agriculture and Processed Foods Export Promotion Scheme of APEDA,
financial assistance was provided for infrastructure development, Quality
Development, and Market Promotion.
Conclusion: Agricultural exports are pivotal for helping farmers increase
their incomes. Apart from being a source of foreign exchange for the
country, the exports help farmers, producers, and exporters to utilize a
wider international market and increase their income. Exports have also
resulted in increased production in the agriculture sector by increasing
area coverage and productivity. Though India aims to double farm exports
by 2022, there are some underlying issues, addressing which would help
boost India’s exports. Some such issues are reduction of post-harvest loss,
availability of necessary infrastructure like cold storage, proper
monitoring of fertilizer and pesticides usage, and adoption of the latest
farm technology.

8.5 SUMMARY
Uttar Pradesh has the largest share of cultivatable land in India. Year wise
area under major crops for food grains increased manifold from 1951 to

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Agricultural Development 2019. Largest area in India is being used for producing rice and wheat so
and Policy that India have self-sufficiency in producing rice and wheat.
When we talk about Employment and wage rate in agriculture sector in
2011, employment in the agricultural sector was more than one million,
with most of employment concentrated in two occupations directly related
to the major economic activity of the agricultural sector.
As the exports of agricultural products by India are more than the
agricultural imports done by it that’s why India is called agricultural
country, but we have to modernise agriculture sector so that we can
achieve self-sufficiency in not only food-grains but fruits and vegetable
front also and achieve the 2nd goal of SDGs.

8.6 QUESTIONS
1. Explain area and productivity in major producing states.
2. Explain area under major crops.
3. Explain employment scenario in agriculture sector in India.
4. What are an annual average daily wage rate of field workers?
5. Explain trends of agriculture Import and Export in India and its
implications.
Reference: Pocket book of Agricultural Statistics 2020.

*****

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