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Agricultural
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Agricultural
Economics
by
Dr. Prallav K. Desai
I
BIOTECH
2010
Biotech Books
Delhi - 110 035
2010 © Publisher
ISBN 81-7622-208-9
ISBN 978-81-7622-208-2
Information contained in this work has been published by Biotech Books and has been
obtained by Its autllOr(s)/edltor(s) from sources believed to be reliable and are correct to
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PRINTED IN INDIA
(v)
Preface
Preface v
1. Introduction 1
Concept of Agricultural Economics • Nature of
Agricultural Economics • Scope of Agricultural
Economics • Types of Agricultural Economics
• Relationship with other Disciplines • Industrial
Development and Agriculture • Significance of
Agricultural Economics
6. Marketing in Agriculture 97
Definition of Marketing • Significance of
Agricultural Marketing • Special Problems in
Marketing • Marketing Functions • Assembling
• Processing • Dispersion • Secondary Services
• Standardisation and Grading • Packaging
• Transportation • Storage • Financing • Risk
Bearing Function • Selling • Marketing Margin
• Market Structure • Local Assembling and
Processing Markets • District Concentration and
Processing Markets • Central Markets • Seaboard
Markets • Wholesale Distribution Markets
• Retail Markets • Cooperative Marketing
• Advantages of Cooperative Marketing
• Cooperative Marketing Societies • Progress of
Cooperative Marketing • Agricultural Marketing
in India • Existing System of Agricultural
(ix)
Marketing • Defects in Agricultural Marketing
• Government Measures for Agricultural
Marketing • Three Categories
Bibliography 285
Index 297
Introduction
Farm Inputs
Food Processing
Feed, Seed
Food Transportation
Fertilizer, Credit
Food Storage
Insurance, Fuel
Food Retailing
Machinery,
Food Services
Veterinary Services
Buildings, Vehicles
Repair Services
Fig: Scope of Modem Agriculture.
Economics, on the other hand, is the science of analysing
the use of limited resources to achieve desired ends. It is a
social science which studies how man satisfies wants through
the allocation of scarce resources.
The English word "economics" is derived from the Greek
word "Oekonomous" which means "housekeeping" and one
of the tasks of the housewife is of making most effective use
of the resources that are available to her, Prof. Lionel Robbins
has defined economics as "the science which studies human
behaviour as a relationship between ends and scarce means
which have alternative uses". As such it involves.
1. Deciding between alternative ways of using limited
resources;
2. Satisfying human needs and wants for which there are
varying degrees of preferences; and
3. Taking into account human behaviour and decision-
making on the best way to use available resources.
4 Agricultural Economics
Fig. illustrates the general subject-matter underlying the
study of economics:
g= =
5t - 1
(pjw)k-1
Hence, in Adam Smith's growth model, growth rate
depends upon the value of p, wand k. Out of these parameters,
the value of wand k are determined institutionally. Value of
p depends on the stock of capital invested and the level of
technology. Hence, in Smith's system, technical improvement
in agriculture is the pivotal point for sparking off development
in other sectors of the economy.
According to Smith, when by the improvement and
cultivation of land, the labour of one family can provide food
for two families, the labour of half the society becomes sufficient
to provide food for the whole. The other half, therefore, can
be employed in providing other things or in satisfying the
other wants and fancies of mankind. The creation of an
agricultural surplus is sine qua non for generating demand for
other goods and services which could be purchased with the
20 Agricultural Economics
excess supply of agricultural products. Therefore, every
increase in the surplus brings about more specialisation in
industry through the division of labour.
Ricardo
Ricardo had scientifically explained the idea of Adam
Smith. Ricardo considers agriculture as the most important
sector of the economy. The difficulty of providing food for an
expanding population serves as the focal point for his entire
analysis. The central problem for classical economists was the
analysis of the overall movement of the economy through
times involving changes in population, capital accumulation
and technical progress.
According to Adam Smith, the objective of economic
analysis was the understanding of the nature and the causes
of the wealth of nations. But to David Ricardo, the principal
problem of political economy was to determine the "laws
which regulate the distribution of commodities among the
classes of society". It was through the laws which regulate
distributive shares that he was trying to build up a simple
macroeconomic model of economic development.
In Ricardo's vision of economic society, there are three
major groups of actors on the economic scene: landlords who
provide land, capitalists who provide capital and workers
who provide labour.
In the progress of society by means of an expansion in
population and an accumulation of capital, there arises,
according to Ricardo, an increasing scarcity of the most fertile
types of land. In order to meet the rising demand for food, the
successive employment of equal units of labour and capital on
poorer grades of land (together with the more intensive use
of labour and capital on better grades of land) brings
diminishing returns in terms of agricultural output. As poorer
lands are brought under cultivation and diminishing returns
. occur, competition among the capitalists for the better grades
Economic Development and Agriculture 21
of land causes a portion of produce of the land to be transferred
to the landlords in terms of rent.
The rate of wages, according to Ricardo, is determined by
the cost of subsistence. His assumption is that labourers have
to be paid a minimum subsistence wage (food and other
necessaries) if the supply of labour in the long-run is to be kept
intact. This implies that, as the population grows, wage rates
in money terms must rise (because foodgrains prices have
risen due to the extension of margin of cultivation). This, in
turn, squeezes the profit rate in agriculture and manufacturing.
A lower profit rate curtails the rate of capital accumulation
and in turn, the rate of growth in national income declines.
Thus, the law of diminishing returns from land dominates
the economic scene and governs the fortunes of all classes.
Ricardo thus showed how shortage of land would set a limit
upon the expansion of agriculture and, therefore, by
implication, upon that of the economy generally.
y
QI---'\--'"'I...
A
E P t----'II,..:...-j
Cl H 1----+--'4.
AP
W
o X
Capital and Labour
Fig.
Ricardo's thesis can be illustrated in Fig. above where OY
measures quantities of corn and OX measures the amount of
labour employed in agriculture. The curve AP represents the
22 Agricultural Economics
average product of labour and MP, the marginal product of
labour. With OM am punt of labour employed in agriculture
sector, OQRM total corn is produces. Rent, according to Ricardo,
is difference between AP and MP.
At the subsistence wage rate Ow, the supply curve of
labour WL is infinitely elastic, and the total wage bill is OWLM.
Total profits WPTL are the residue after deducting rent and
wages from the total produce, i.e.
WPTL = OQRM - ( PQRT + OWLM)
Total output increases with economic development and
with it the wage fund also rises. This leads to a proportionate
increase in the amount of labour (population) which in turn
increases the demand for corn which will result in rise of its
price. As agricultural operations are subject to law of
diminishing return rents continue to rise and profits, therefore,
have a tendency to fall.
When amount of labour applied to agriculture sector
increases from OM to ON, the total output increases to OABN.
Out of this, OWSN is the total wage bill and HABS is the share
of rent. The share of profit falls to WLS'N. This implies that
as economic development proceeds, real wage-rate remains at
the subsistence level and profits tend to fall. Obviously the
change in national income goes in favour of landlords.
Limit on Growth
The Ricardian model of growth shows the accumulation
capital, specially of corn surplus, as the main source of economic
expansion. By analysing this aspect of growth, what Ricardo
tried to show was how shortage of land would set a limit upon
the expansion of agriculture and, therefore, by implication,
upon that of economy generally. His two sector analysis of
growth thus, shows how the operation of diminishing returns
in agriculture will set a limit on the process of growth in non-
agriculture by limiting the growth of working capital (wage
goods) needed for the expansion of the later.
Economic Development and Agriculture 23
Let us suppose that total output (Y) is sum of agricultural
and industrial outputs, i.e., Ya and Yi respectively. That is
Y = Ya + Yi.
The Ricardian theory of distribution states that:
Ya = Wa + Sand
Yi = Wi + P
Where
Wa = Wage bill in agriculture,
S = Surplus Corn output.
Wi = Wage bill in industry.
P = total profit in industry.
Let us suppose that Wi - S because the wage bill of industrial
sector depends on surplus corn output in agriculture sector.
Hence,
Yi = Ya - Wa + p (.: Ya - Wa = S)
Dividing by Y on both sides, we get:
Yi Ya-Wa+P
Y Y
Yi Ya _ Wa + PlY
Y (Share of industrial output)= Y Y
The above equation shows that the share of industrial
Ya Wa P
output in total output depends on the ratios of y - y and Y .
This also indicates that greater the ratio of SlY =
(Ya- Wa) ; greater the ratio of YWand greater the ratio of Yo/Y,
Y
greater the value of Yi/y, assuming W/y and PlY as constant.
An increase in Wa/Y will adversely affect the expansion of
industrial output.
Thus, according to Ricardo, if agricultural output does not
grow at a rate which is required to generate an amount .)f
wage goods in order to cope with the demand of these goods
24 Agricultural Economics
for industrial workers, there is always tendency to raise money
wage rate and as a consequence profit is bound to fall.
According to Ricardo, "It is by the rise of price of corn that
all other profits are regulated by agricultural profit. If the price
of corn remained low, money wages would not rise and general
profits could not fall."
It was only after Keynesian revolution in the 1930's that
intellectuals started showing more interest in the theories of
economic development. After the Second World War with
many colonies winning their independence, literature on
economic development started appearing. In the modem
literature, role of agriculture in economic development has
been further stressed.
Most of the underdeveloped countries who won their
independence after the Second World War mostly suffered
from three major features which impede their process of growth.
The first feature is the existence of abundant supply of labour
with marginal productivity of labour being negligible or
approaching zero. The second is the underdeveloped nature
of agriculture leading to low productivity of land. The third
is the smallness of the capitalist sector with inadequate
inevitable surplus for economic development.
Lewis TheonJ of Unlimited Supplies at Labour
Lewis in his well known article, "Economic Development
Unlimited Supplies of Labour" presented a two sector model
and investigated the expansion of the capitalist sector as it is
fed by supplies of cheap labour from the agriculture sector.
According to Lewis, under conditions, prevailing in majority
of underdeveloped countries, the classical assumption of
unlimited supply of labour is more relevant. Due to rapid rise
in population in the countries, surplus labour exists in large
sectors of economy where marginal productivity of such labour
is negligible, zero or negative.
Lewis analyses the process of economic expansion in a
dual economy composed of a "Capitalist" sector and a
Economic Development and Agriculture 25
"Subsistance" sector. Output per head in subsistance sector is
lower than that in the capitalist sector. People in subsistance
sector are generally backward, illiterate and unskilled with the
result that their average productivity is low. On the other
hand, people engaged in capitalist sector are advanced, literate
and skilled.
The basic assumption of Lewis', Model is that there exists
surplus labour in the subsistance sector. Such labour is there
either with zero marginal productivity or having marginal
productivity much less than the institutional wage. According
to Lewis, the surplus labour in the subsistance sector acts as
a source from which an unlimited supply of labour can be
drawn for the development of the capitalist sector. "In this
situation, new industries can be created or old industries can
be expanded without limit at the existing wage, or to put it
more exactly, shortage of labour is no limit to the creation of
new sources of employment".
In Lewis' model of growth, savings play a crucial role. In
his model, if capitalists do not reinvest a larger and larger
proportion of their profits, neither will the total product expand
nor will opportunities for employment increase. "The central
problem in the theory of economic development is to
understand the process by which a community has previously
been saving and investing 4 to 5 per cent of its National
income or less, converts itself into an economy, where voluntary
saving is running about 12 to 15 per cent of national income
or more.
As explained above, surplus labour exists in the subsistance
sector and it can be attracted to the industrial sector if it is
offered a wage rate which is a little higher than the institutional
wage rate prevailing in the rural areas. Capitalist wage is
generally higher than the subsistance earnings in order to
compensate labour for the cost of transferring and to induce
labour to leave the traditional life of the subsistance sector. At
the existing capitalist wage, however, the supply of labour is
26 Agricultural Economics
considered to be perfectly elastic. This situation has been
illustrated in the following Fig.
In this figure, OW is the real wage rate in the capitalist
sector and WS, the perfectly elastic supply of labour. Given
a fixed amount of capital at the outset, the demand for labour
is initially represented by the marginal productivity schedule
of labour, NI Dr If OW is the current wage rate, the amount
of labour employed in the capitalist sector is OL, and beyond
L, workers earn whatever they can in the subsistence sector.
The total product NI PLO in the capitalist sector will then be
divided between wages in the amount OWPL and the
capitalist's surplus in the amount WPNr
Quantity of Labour
y
....
.
t:
.g
cl::
L
x
Quantity of Labour
Fig.
In tracing the process of economic expansion, Lewis
emphasises that the key to the process is the reinvestment of
the capitalist system. As the capitalist sector expands, labour
is withdrawn from the subsistence sector into wage
employment, the surplus then becomes even larger, there is
still more reinvestment of profits, and the process continues
on, progressively absorbing the surplus labour from the
subsistence sector.
Economic Development and Agriculture 27
The process of capital formation, as envisaged by Lewis,
comes to an end when capital accumulation catches up with
population, so that there is no longer surplus labour in the
subsistence sector left to be absorbed in the industrial sector.
Beyond this point, real wages no longer remain constant, but
instead, rise as capital formation occurs. It will now be in the
interest of the producers in the subsistence sector to compete
for labour since the marginal product of labour will no longer
be below the institutional wage. When this point is reached,
the agricultural sector is said to have been commercialised.
Fei and Ranis Model
Attention needs to be drawn to the fact that both Nurkse
and Lewis recognised the importance of agriculture in
providing "wage goods" to the industrial workers. Failure to
provide food could seriously limit the process of economic
expansion envisaged by their models. Yet they did not seriously
prescribe a clear and suitable line of action which could keep
off such a danger to the process of economic development. Fei
and Ranis are too careful to miss laying stress on the strategic
role that agriculture is desired to play in the entire development
effort.
In their view: "The strategic nature of agricultural sector
in the dualistic economy is due not only to its preponderant
size but also .... to the peculiar production and consumption
conditions attached to the agricultural goods."
Unlike Nurkse and Lewis, agricultural innovations and
austerity are brought to the forefront of the development effort,
given due recognition and put in their proper perspective by
Fei and Ranis.
The Fei-Ranis model also focuses attention on the transfer
of labour from the agricultural to the non-agricultural sector
as central to economic development. Major and well-recognised
social problem of underdeveloped countries, according to Fei
and Ranis, is the existence of the so-called overpopulation in
Agricultural Economics
28
the per sist ent pre ssu re of
its agr icu ltur e sector. This den otes
es, mai nly lan d and the reb y
popUlation aga inst scarce resourc
bou r ratio. Classical gro wth
lead ing to the wor sen ing lan d-la
ions of Ricardo and Ma lthu s
mo del and the pessimistic conclus
ary tech nol ogy and the law
bas ed on the ass um ptio n of stat ion
icu ltur al sec tor has bee n
of dim inis hin g retu rns in the agr
below.
dep icte d by Fei and Ranis in Fig.
are lab our and cap ital
In bel low Fig.; the inp uts use d
hor izo nta l and vertical axes
wh ich hav e bee n me asu red on
s are rep rese nte d by cur ves
respectively. Pro duc tion contour line
plification, con stan t retu rns
M, M', M" .... For the sak e of Sim
ov * and OU * ma rk off the
hav e bee n ass um ed. Ridge lines
bel ow OV*, the pro duc tion
reg ion of factor substitutability, e.g.,
icat ing tha t wit h lan d hel d
con tou r lines bec om e hor izo nta l ind
lab our ren der s tha t factor
con stan t, any furt her increase in
ger be increased. If the tota l
red und ant as out put can no lon
Ot, the am oun t of lab our
am oun t of lan d is sup pos ed to be
bec om ing red und ant can be
wh ich can be abs orb ed wit hou t
det erm ine d by the ridg e line, ts.
M"
]
.s..
U
___
E.====-_ _ Lab --1_ _ _ X
our
Fig.
rati o R = ts/ot (lab our
The refo re, the lab our util isat ion
of lan d pro duc tive ly) whi ch
wh ich can be emp loy ed per uni t
e line OV*. The pop ula tion
is the slop e (inverted) of the ridg
uni t lan d) in the agr icu ltur al
den sity (nu mb er of wor ker s per
Economic Development and Agriculture 29
sector, called the endowment ratio S = te/ot. The labour force
which is productive is ts and the surplus labour is se. The
fraction of the existing agricultural labour force which is
productive is called the non-redundancy co-efficient T, which
is equal to:
ts ts / to R
--=-
te te/et 5
Non-redundancy radio T, therefore, is directly proportional
to the labour utilisation ratio R and inversely proportional to
the endowment ratio S. It describes how favourably a given
economy is endowed with arable land relative to its agricultural
population under the existing conditions of production
techniques.
When the amount of arable land is given, the production
conditions described above can be pictured alternatively by
familiar curves representing total physical productivity of
labour (TPP L) and marginal physical productivity of labour
(MPP).
Fig. shows TPP L and MPP L curves. It is clear from Fig. that
TPP L increases at a decreasing rate when more and more
labourers are added to the fixed amount of land ot, until it
becomes horizontal at M. Similarly, the curve MPP L gradually
decreases as the law of diminishing returns is making its effect
felt, until at point G, the MPP L becomes zero.
In the context of Fig., the non-redundancy co-efficient T
is equal to OQJOP.
From Fig., average productivity APP = MP/OP
(A)
v*
Labour
Point
(C) I i
w ..................................... ; ...............··.. +···············.······......................... w·
: MPI' Curve
i I.
Fig.
In order to have a total view of development process in
the context of dualistic economy, we now turn to the industrial
sector. The role of industrial sector is essentially related to the
expansion of employment opportunities required for the
Economic Development and Agriculture 31
absorption of the surplus labour force released by the
agricultural sector and thereby a gradual expansion of
industrial productive capacity and output.
Diagrammatic Exposition
The process of labour absorption by the industrial sector
of the dualistic economy has been exhibited diagrammatically
in the previous figure. In the double deck diagram given
below, upper deck represents the production contour map of
the industrial sector.
The production contour lines indexed by QO' QI' Q2 are
once again assumed to exhibit the property of constant returns
to scale. The central expansionary role of the industrial sector
may be symbolically represented by an expansion path through
time AO' AI' A2' representing a gradual expansion of the capital
stock KO' KI, K2, of the industrial labour force Lo' LI' L2' and
industrial output QO' QI' Q2·
Fig.
The lower deck in the figure above shows the marginal
productivity of labour (MPL). In this figure, PS represents the
supply curve of labour to the industrial sector. Its horizontal
32 Agricultural Economics
portion PP 2 corresponds to the existence of the pool of
redundant labour which can be absorbed by the industrial
sector at a constant wage W, which is greater than W, the
subsistence institutional wage. The rising portion PS curve is
marked by a turning point P2' which corresponds to the
situation when redundant labour is completely absorbed by
the industrial sector.
With respect to the industrial sector of the dualistic economy
is reasonable to accept the customary competitive assumptions
in the labour market implying that industrial entrepreneurial
behaviour is characterised by profit maximisation. Under this
assumption, the marginal productivity of labour takes an
operational significance as the industrial demand curve for labour.
For each amount of capital stock Ko' KI, K2, the marginal
physical productivity of labour curve (PPL) may then be drawn,
that is, curves Mo' MJ' M z. The competitive employment
equilibrium positions in the labour market are consequently
indicated by the intersections of these curves with the industrial
supply curve, iL, points PO' PI' P2·
Let us suppose that there exists a stock of real capital
goods of volume Ko in the industrial sector. The equilibrium
employment position is then determined by curve Mo and
indicated by the point Po. At this point, the industrial sector
is making profit (represented by the shaded area PPO) and the
magnitude of total real wage income is Wo (OLo PoP). At the
low level of per capita income, it is reasonable to assume that
workers do not save but industrial profits (IIvY constitute the
major source of investment funds originating in the industrial
sector.
Moreover, in determining the total supply of investment
funds available for industrial capital accumulation, it should
be noted that there exists a second important source, tlle hidden
rural savings. If these savings (say) so are Siphoned off to the
industrial sector, then the total investment fund of the industrial
Economic Development and Agriculture 33
sector is IIo + 50' SO that the total capital stock in the next
period will be KI
With this new capital stock K\, a new MPP t curve is
determined, Mp. This determines a new equilibrium position
PI causing an increase in employment of labour by the amount
Lo LI' This represents an additional transfer of labour from the
agricultural sector to the industrial sector as a result of capital
accumulation.
In this fashion, we have shown how the agricultural sector
constitutes an important source of supply of both manpower
and savings for fuelling the expansion of the industrial sector.
According to the above described process, industrialisation
and output growth may be viewed as a continuous shifting
of the MPP L curve to the right ( Mo M\ M 2) through time.
Associated with such a shift, there must occur a continuous
process of reinvestment of industrial profits (lIo III 1I2) and of
the channelisation of agricultural surplus (So SI 52) into the
industrial sector in order to finance a continuous expansion
of industrial capital stock (Ko K\ K2 ). This, in turn, leads to a
continuous increase in the demand for, and employment of,
labour (Lo L\ L2) and a continuous expansion of industrial
output (Q o Q\ Q2)
In this manner, we have briefly outlined the crucial
significance of the agricultural sector in the economic
development, in that it constitutes an important source of
supply of both manpower and savings for fuelling the
expansion of the industrial sector. Disguised unemployment
in over populated economies responds to stimulants of
economic growth by providing cheap labour at constant real
wages for non-farm sectors. During this phase, it is plausible
to improve agricultural productivity by relaxing the constant
real wage assumption. The development of agriculture raises
the rural purchasing power and provides a mass market for
industrial goods and results in the expansion of investment
opportunities.
34 Agricultural Economics
It is, thus, obvious from the contribution of Lewis and
Ranis and Fei that mobility of labour from the farm to the non-
farm sector is an essential ingredient of economic
transformation as well as development of agriculture.
Experience of all the developed economies indicates that
due to the operation of various pull and push factors
contributing to the migration of labour from rural to urban
areas, the share of agricultural sector in the total labour force
of the country diminishes. Consequent upon the transfer of
labour from the agricultural sector, the productivity of labour
and capital in the farm sector increases and this leads to an
increase in the earnings of farmers. Increased earnings of
farmers create essential conditions for the adoption and
absorption of new agricultural strategy, which in turn
contributes to enhanced returns per acre.
It is now customary to summarise in four ways how greater
agricultural productivity and production contribute to an
economy's development:
1. It helps in faster development by supplying foodstuffs
to the rapidly increasing population and raw materials
to other expanding sectors in the economy;
2. The developing agricultural sector also provides an
investible surplus of savings and taxes to support
investment in another expanding sector;
3. The rising agricultural income of the agricultural sector
will raise the demand of the rural population for
products of other expanding sectors;
4. It can also contribute to the economic development of
an economy by relaxing the foreign-exchange constraint
by earning foreign exchange through export or by saving
foreign exchange through import substitution.
Kuznet summarises these contributions as:
1. The product contribution.
2. The factor contribution.
3. The market contribution.
Economic Development and Agriculture 35
Precisely, the most important contribution of agriculture
to the economic development is that constituted by growth of
product within the sector itself. An increase in the net output
of agriculture, in and of itself, represents a rise in the product
of the country - since the latter is the sum of the increases
in the net products of the several sectors.
This product contribution can be examined firstly as a
contribution to the growth of total net or gross product, and
secondly to the growth of product per capita. Algebraic notation
of the above argument is given below:
Pa = Product of agriculture sector (Sector A)
Pb = Product of all other sectors (Non-
Agriculture Sector B)
P = Total product = Pa + Pb
II P = Increment in total product
Y. = rate of growth of Pa
Yb = rate of growth of Pb, so that
Pa 1 = Pa o (1+ Y.), the subscripts referring to time
Pb1 = pbo (1+ Y b)
Then, AP = Par. + Pbrb
The equation for the share of the growth of agriculture
product in the growth of total product is therefore:
Percentage Percentage
COllntry of Working PoplIlation of Gross Domestic
Engaged in Agricllltllre Prodllct (at factor cost)
Canada 5.2 3.4
Denmark 8.3 5.7
France 8.4 4.6
Japan 9.7 3.4
UK 2.7 2.0
USA 3.6 1.6
... (1)
= -(l+ra)t]/[(PaO (l+rS]
... (2)
Equation (2) is of name help in deducing relationship
between the agricultural sectors and non-agricultural sectors.
For instance, the magnitude is determined by initial ratio
I p,n, and the compound growth of the two sectors (1+ r)t
and (1 + r)
d
If r n
> raand
il
pO / pOa is relatively large, then the
magnitude of change is positive and large.
The major points of interest in this study are the ratio (PJPo)
and the magnitude of change (Pn / p") over a period of time.
For purpose of comparisons, three periods of time were chosen;
1965, 1984 and 1990. Results of computations of the ratio's
P" / Pa are presented in the following table which tells for each
country how many folds larger the non-agricultural sector is
than the agricultural sector. Some countries display small
magnitudes in 1984 or 1990 or both than in an earlier period.
46 Agricultural Economics
From the follow ing table, the largest change was witnes sed
by Hong Kong and Singap ore where the ratios in 1984 and
1990 of almost 100 are the largest than those in 1965. For
United States and the United Kingd om, the ratio increa sed
from 33 in 1965 to 49 in both 1984 and 1990.
The follow ing table summa rises inform ation and shows
for each year the mean of (Pn/P) , expres sed as (x), the standa rd
deviat ion (s), the co-efficient of variati on (cv) obtain ed as
(SIX) and the minim um and maxim um of observ ations of each
of the four groups of economies. As eviden t from the follow ing
table, a system atic change in the averag e X is appare nt both
in the directi on of time from 1965 to 1990 and in the directi on
of econom ies from low income to high income.
In both directions the average magnitude (PJPJ increases -
exactly what is expect ed from econom ic develo pment theorie s
which procla im that the agricu ltural sector shrink s overtim e
as compa red to the other sectors for every countr y. These
theorie s also hold that as the income rise, the import ance of
the agricu ltural sector dimini shes.
Prof. Edwar d summa rises his study in the follow ing lines.
He writes, lithe econom y of each nation is made up of three
broad sectors; agricu ltural, indust rial and services, while in
develo ping countr ies the share of the agricu ltural is large,
throug h the proces s of develo pment the agricu ltural sector
shrink s in favour of the other sectors. Therefore, one may use
the criteria of the ratio of the non-ag ricultu ral to the agricu ltural
sector as a means to categorise the level of develo pment of a
countr y.
The World Bank has classified impor tant econom ies of the
world, in a rationa l manne r. The following table shows it well.
Economic Development and Agriculture 47
Signifi cant Economies (World Bank List - 2009)
Economy Code Region Income Group
E!
11. Public Admini stration 3.91 7.82 9.21 4.09 6.43 5.45
12. Other Services 6.22 4.19 8.19 3.7 9.26 3.53
Total t"11
6.54 3.43 5.35 4.53 7.93 8;:
3.58
Note: These are implicit ICORs calculated over the Plan period. For the Tenth
-.
Cl
PIan, these are targets. * Estimat ed
Source: Plannin g Commission, New Delhi.
Economic Development and Agriculture 51
Role of Agriculture in India
A flourishing agricultural sector is far more important for
the development of Indian economy, since farming is less a
business than a tradition in India. Even at this semi-
industrialisation stage, about 80 per cent of its population still
lives in the rural areas and directly or indirectly depends on
agriculture for its livelihood.
The mere existence of about 85 crores of persons which are
further multiplying at a rate of 2.5 per cent per annum depends
on the developed agricultural sector. Further, most of our
traditional industries on whose products depend our bulk of
foreign trade and foreign earnings draw their raw material
from this very sector. It is the surplus generated by this sector
that would help Indian economy to reach the "Golden stage",
since the total savings fund is made up of savings from the
industrial sector and savings from the agricultural sector,
i.e.,
where,
1= S., + 5
I =
.
total saving fund.
5, = savings from the industrial sector.
5. = savings from the agricultural sector.
5; is the function of profits generated by the industrial
sector, which in turn depend upon the extent of demand created
for industrial products by the agricultural sector. If the
agricultural sector remains underdeveloped and fails to
generate a matching demand for industrial products, profits
will fall and we will soon be approaching a stage termed as
"stationary state" by classical writers. Hence, the whole burden
of increasing investment falls on the agricultural sector, so
that.
5a = TAS - lar - i
where, T AS is the total agricultural surplus
Fa is the farmer's consumption of agricultural goods
la is the farmer's consumption of industrial goods.
52 Agricultural Economics
From above equation, Sa can be increased if we increase
the total agricultural surplus, TAS and Fa and la could be
maintained at the same old level. Fa and la can be maintained
at the old level by the adoption of certain monetary and fiscal
measures by the government. TAS on which depends our
surplus and which in turn would initiate a process of
development can be augmented only if we could increase the
productivity of our agricultural sector.
We can, thus, say that in the absence of a developed
agricultural sector, the base for "take-off" into a mature
economy would be weak and Indian economy characterised
by widespread disguised unemployment and a high rate of
population growth, is expected to remain in a pitiable condition.
The role that the agricultural sector is playing in India at
present can precisely be discussed under the following heads:
Share of Agriculture in National Income
The share of agriculture in national income is a crucial
indicator of the role that agriculture plays in the economic
development of a country. As the country rides on the wheels
of progress, the relative contribution of agriculture in national
income declines with the country becoming more and more
prosperous. The expanding non-agricultural sector diverts
surplus manpower from agriculture to industry and the
improvements in agriculture enable a smaller number of people
to produce for a larger population. With advanced agricultural
technology, agricultural products are produced even for
exports.
To the extent, therefore, the share of agriculture in national
income declines, it marks a better level of economic
advancement. On the other hand, agriculture is the single
large contributor to national income. Therefore, a progressive
agricultural sector means a higher level of national income
and consequently, a higher level of economic development.
The Indian economy is still predominantly agricultural,
about a half of the country's national income is derived from
Economic Development and Agriculture 53
Two facts are being reveale d. One, agricu lture and allied
indust ries contrib ute signifi cantly a high share of the nation al
income . Second , as hinted above, the share of agricu lture in
nation al incom e has been decrea sing steadil y.
The previo us table clearly shows that agricu lture even in
recent years is by far the most impor tant contrib utor to the
nation al income , though under the impac t of industr ialisati on,'
its share has been declini ng gradua lly. Its share which stood
at 58.9 per cent in 1950-51 has declined to 39.S per cent in 1983-84
while the share of industr ies which was 14.9 per cent in 1950-51
has risen to 21.S per cent in the same period .
-
Role of Agriculture
in Economy
Land is the first thing that comes to mind when one talks
of agriculture. In fact, it is not possible to think of agriculture
without the use of land. Not that the use of land in non-
agricultural pursuits is less significant but the nature of the
industry of agriculture and its various processes make the use
of land central to agricultural pursuits. The concept of land as
used in economics is very complex and is held to stand for all
natural resources. Land in agriculture may, however, be used
in a restricted sense though its complex form affects agriculture
in several ways. To be precise, our discussion" will be pertinent
to farm land".
fI
Land Use
Land utilisation statistics revealed that net sown area
increased from 1,187.5 lakh in 1950-51 to 1,424.2 ha in 1998-
99. The relative share of food grains and non-food grains in
gross increased from 404.8 lakh ha to 682.8 lakh ha in the same
duration.
Harvesting
The 3 main crop seasons are - kharif, rabi and jayad. Major
crops are rice, jowar, bajra, maize, cotton, sesame, soyabean
and groundnut. Major rabi crops are wheat, jowar, barley,
gram, linseed, rapeseed and mustard. Rice, maize and
groundnut are grown in the summer also.
Three types of seeds, namely, breeder, foundation and
certified, are recognised by the system. Indian seed programme
include central and state ICAR, SAU system, Public sector,
cooperate sector and private sector institutions. National Seeds
Corporation (NSC), State Farms Corporation of India (SFCI),
13 state seed corporation (SSC) and about 100 major private
Modern Indian Agriculture 73
sector seed companies are the main components of Indian
Seed, State Seed Certification Agencies (SSCAs) and 19 State
Seed Testing Laboratories (SSTLs) looks after quality control
and certification. The Seeds Act, 1966, provides:
1. Legislative framework for regulation of quality of seeds
sold in the country.
2. System of certification of seeds sold in India.
3. Notification of varieties, a prerequisite certification
Administration of the Act and quality control of seeds
to look after by control solved committee and its various
subcommittees and Central Seed Certification Board.
Seed has been declared an essential commodity under the
Essential Commodities Act, 1955. The Seed (Control) Order
1983, was promulgated to control and regulate the seed
production and distribution. The new seed policy on seed
development has been in operation since 1988. The main aim
of seed policy is to makes available the best quality seed
planting material to farmer" anywhere in the world. Plants,
11
Meat 57
"This page is Intentionally Left Blank"
Indian Agricultural Policy
Multinational Companies
As a consequence of liberalisation and globalisation of the
Indian economy, it is but expected that Multinationals will
enter the domestic market. The activities of these corporations
have a significant impact, positive or negative on the economic
structure and political and social systems of the countries
where they operate.
The MNCs are interested in capturing markets in host
countries because the domestic demand may be inadequate.
MNCs have played an innovating and catalytic role in funding
new ind us tries, transmitting technological and managerial skills
as well as capital and, in many cases, creating entire social
infrastructures, including transportation, in order to conduct
their business.
Moreover, MNCs have world wide marketing organisations
that facilitate exports from developing countries and thus help
the process of transformation of a traditional less productive
sector into high productive export sector. "Opportunities that
Indian Agricultural Policy 93
emerge, through the entry of MNCs are tremendous by way
of forcing the domestic companies to become quality conscious
and cost effective both in the supply market and product
market.
Also the induction of new technology and quality
parameters in collaborative enterprises can go a long way in
improving production and value added processing of
agricultural produce. As the process catch up, more avenues
of gainful employment would be created for both the educated
and uneducated employed persons. Farm incomes will improve
and gainful employment opportunities would expand."
On the other hand, the operations of MNCs have, of course,
been beset with shortcomings and disadvantages. Their
technical, financial and market network strength as well as
risk bearing capacity can compete out the indigenous goods
and services from the national market. For instance, under
GATT provisions, improved and hybrid seeds can capture the
Indian market at the cost of National and State level Seed
Corporations and Private Domestic Seed Companies.
Similarly, these can capture (they have already captured)
the business of processing of agro-products and considerably
corner the domestic market on the strength of their quality
products based on state of cost technology used (Pepsi taking
over manufacturing of potato chips). To the extent the national
companies are crowded out by the multinations, they develop
the strength for treating the agricultural produce market as a
captive market for the supply of raw materials.
These imminent dangers steering into our eyes should not
diminish our efforts and also our courage to continue with the
process of reforms. On the other hand, thoughtful strategy
needs to be evolved to dilute the adverse effects and create
workable channels of sharing the emerging global gains in a
more sounder fashion.
The effect of MNCs entering into agro-based industries
would be commercialisation of agriculture. A likely shift in the
94 Agricultural Economics
crop pattern from food crops to cash crops may be expected
mainly in the areas served by irrigation. Another possible shift
will be in favour of crops used for processing industries like
maize and barley which are used for making breakfast cereals
(Kallog's Corn Flakes).
As the food processing industry will aim at getting assured
supply of inputs which will be agricultural products, the shift
in crop pattern will be more in the areas served by better
infrastructural support and assured irrigation facility. This
may effect the food production adversely.
It may generally be expected that the large and medium
farmers will be the first to adopt the changes, as they will be
able to accept the risk involved. This may further increase the
class differences in the rural society.
Commercialisation of agriculture as a result of new
investment made by MNCs may lead further regional and
crop imbalances which are highly visible in the post-green
revolution scene of Indian agriculture. Crops which will go
directly for processing and the areas where they will be grown
will prosper much faster than other areas.
As a result of free entry of MNCs Indian agriculture may
change to a commercial venture - Production as well as
productivity of crops will have a chance of improvement.
However, there is possibility that most of the investment may
take place in areas served by better infrastructure and relatively
well off part of the rural community will participate in the
changed atmosphere, which may lead to further regional and
income imbalance in the economy.
Employment in agriculture proper may decline over a
period of time due to increase in mechanised farming, however,
with the growth of the economy, employment situation is
likely to improve. Many well known foreign companies have
already entered and are showing interest in investing in India
and many more may follow.
Indian Agricultural Policy
95
On the whole the policy change s will be beneficial for the
develo pment of agricu ltural sector and inturn the entire
econom y. Care will have to be taken that the new initiatives
in agricu lture bring about a rational balance betwee n the growth
of crops, on the one hand and among the region s as also
among differ ent system s of farmin g on the other. The
exicite ment of new regime should not blur the view of our
own priorities, even when it would mean a relativ ely slow
transfo rmatio n withou t, of course, the proces ses of change
which are immed iately warran ted to usher in a better state of
econom y on the thresh old of next millen nium.
"This page is Intentionally Left Blank"
Marketing in Agriculture
Finan cing
The financ ing function of marke ting involv es the use of
capita l to meet the financial requir ement s of the agenci es
engag ed in variou s marke ting activities. Farm produc ts are
not sold immed iately after they are grown . It takes time for
goods to reach the hands of the ultima te consum ers. Thus,
there is a long interva l betwee n the time when the farm produc ts
are ready for sale and the time when these goods reach the
hands of the user.
To the extent that there is a delay betwee n the time of the
first sale of raw produc ts and the sale of finishe d goods to the
ultima te consum er, capital remain s tied up in operat ion. "The
service of provid ing the credit and money needed to meet the
cost of selling merch andise into the hands of the final user is
comm only referre d to as the finance function in marke t."
Sel ling
Sel ling or mak ing per son s to dem
and and agr ee to ma ke
pay me nt for wh at a giv en sell er has
for sale is the cen tral step
aro und wh ich all oth er mar ket ing
services rev olv e. On tha t
sco re, it ma y be con side red as the
nuc leus of mar ket ing . Selling
inc lud es tran sfer of title and collecti
ng or rece ivin g of pay men t.
Sel ling in its bro ade st sen se not onl
y effects own ersh ip tran sfer
but also hel ps in iden tify ing pro spe
ctiv e cus tom ers, stim ula ting
dem and and pro vid ing info rma tion
and serv ices to buy ers. In
ord er to ach iev e the se goals, the
ma rke t mu st com bin e suc h
activities as per son al selling, adv
erti sem ent , sale s pro mo tion ,
pac kag ing and cus tom services.
Ma rke tin g Ma rgi n
In dea ling wit h the pric e pro ble
ms of mar ket ing , it is
imp orta nt to dist ing uish bet wee n
the con sum er pric e, the pric e
or ma rgin wh ich mar ket ing age
ncie s rece ive for the serv ices
the y per form and the pric e rece
ived by the pro duc er of farm
pro duc ts. Eac h of the mar ket ing
serv ices just des crib ed abo ve,
as wel l as the job of buy ing and
selling, add s to the cos t of
Marketing in Agriculture 111
the farm product by the time it reaches the consumer. The
difference between the amount consumers pay for the final
product and the amount producers receive is generally referred
to as marketing bill" or the marketing margin". This margin
11 11
LOCAL ASSEMBLY
MARKET
F.C.I. 51 76
C.W.c. 12 20
S.W.Cs 6 24
State Govern ments 18 19
Cooper atives 32 47
canno t find their way to the nearby towns unless village s are
connec ted by proper roads. Our planne rs have assign ed higher
priorit y to the constr uction of rural roads. Accord ing to the
inform ation availab le with the Planni ng Comm ission, 26,724
out of 69,400 (67.3%) village s having a popula tion of over
1,500,26,814 out of 56,608 (47.4%) village s having a popula tion
.of betwe en 1,000-1,500 and 1,02,738 out of 4,67,075 (22.1 %)
village s having less than 1,000 popula tion are expect ed to have
been connec ted by all-we ather roads as on 31st March , 1984.
Efforts to develo p more rural roads and to link many village s
with the marke ts will be pushed up during the Seven th plan
period .
Provis ion of Central Assistance: A schem e for provid ing
Centra l assista nce for the develo pment of selecte d regula ted
marke ts is in force since 1972-73. Since the incept ion of the
schem e and till 31-3-1984, 449 selecte d regula ted marke ts have
been grante d Centra l assista nce of Rs. 1,557.18 lakhs. To help
the farmer s, particu larly the small and margin al ones, who
depen d on the neares t rural marke ts like "hats" , "shand ies",
etc. for the sale of their small marke table surplu s, a schem e
for the develo pment of primar y rural and wholes ale marke ts
in backw ard areas is in force since 1977-78. Under this schem e,
grant-i n-aid to the extent of Rs. 1.50 lakhs per primar y rural
marke t and Rs. 5lakhs per rural wholes ale marke t situate d in
backw ard areas has been made. During the years 1977-78 to
1983-84, Central assistance of Rs. 2,224.30 lakhs has been grante d
for develo pment of 1,948 rural primar y marke ts.
"This page is Intentionally Left Blank"
Agricultural-Economic
Transformation
commodities;
Y is the household's income and T the tastes and habits
of the members of the household.
Law of Demand
We observe in our daily life that the higher the price
charged for an article, the less of it will be demanded. And
the lower its price, the more units people will wish to buy.
Thus, there exists at anyone time a definite relation between
the price of a good such as wheat, rice, etc. and the quantity
demanded of that good. We have seen above that the amount
demanded is influenced by many factors. While explaining the
law of demand, we assume all other factors except price to be
constant.
Thus, other things remaining the same, the law of demand
states that more will be demanded at a lower price and less
when the price is higher. In other words, there is an inverse
relationship between the quantity demanded and price. Based
on the law of demand, we can construct a demand schedule
for an agricultural commodity.
An individual household demand schedule is a list of
various quantities of a commodity which an individual
household purchases at different alternative prices. The
following table shows the quantities of potatoes that would
be demanded each week at a number of alternative prices.
152 Agricultural Economics
Price per Quintal Quantity Demanded
ill Hundred Quintals
per Week.
1 80 1.0
2 60 2.0
3 50 3.0
4 40 5.0
5 20 6.0
6 10 8.0
The above table gives the quantities of potatoes demanded
for six selected prices but there is a separate quantity that
would be demanded at each possible price. It is evident from
table that when the price of potatoes is as high as Rs. 80 per
quintal, demand for potatoes is as low as 100 quintals. With
a fall in price, the demand has shown a corresponding rise.
A market demand schedule can well be obtained from this
individual household schedule. The market demand schedule
can be obtained by adding up all the demand schedules of the
individual households in the market.
Demand Curve
Data contained in the previous table when plotted on a
graph give the demand curve as shown in the figure below.
y
o x
QUdntities of Pottotoes
Fig: Demand Curve
Fixing Price in Agriculture 153
DD is the demand curve. This curve shows the quantity
of potatoes that the household would like to buy at each price
of potatoes.
The downward slope of the demand curve indicates that
the quantity demanded increases as the price falls. The curve
has been drawn on the assumption that income, tastes and all
other prices remain constant.
In the case of inferior goods, the demand curve may be
perverse. Inferior goods are those goods which purchasers
buy in smaller quantities as they become richer. The demand
curve of such goods will only be perverse if they account for
a significant proportion of the purchaser's total expenditure.
Perverse effects found mostly in the case of staple goods of
relatively poor populations since these take a high proportion
of their total income, leaving little scope for readjustment of
their expenditure elsewhere.
The demand curve that an individual farmer faces for his
produce is perfectly elastic. Since he is among the large numbers
of producers, he with his own produce cannot influence the
market price. In the market, he is a price-taker. At the prevailing
market price, he can sell whatever quantity of produce he has
produced.
Elasticity of Demand
Consumer's decision as to how much to spend on as
commodity at different prices is of great importance to the
producers of the commodity. It is so because the responsiveness
of the consumers to price changes determines the changes in
total revenue resulting from changes in price, and producer's
profit is the difference between total revenue and total cost.
The law of demand simply shows the direction in which
demand will move when the price changes. But it does not
show by how much or to what extent a change in price will
affect the quantities demanded. With some products, a change
in bring about a proportionately large increase or
decrease in the quantity that can be sold, while with others,
154 Agricultural Economics
the quantity is only slightly responsive to changes in price.
This responsiveness of consumers to change in price is known
as elasticity of demand". It is the relative change in the quantity
11
P11---.,..,.---"........
x D!--"""-"""'---D P I---A.-+-";;:::"'___
D
Y D i y i y
o ql q2 Q 0 Quanti@ 0 ql 0 0 Q
Unit Elasticity of Demand Perfectly Elastic Demand Relative Elastic
E=-l E=oo E<oc,E>l
P (d) P D
PI 1 - - - - \
x X
P2 1 - - - t - \
D
o Q 0 Q
Perfectly Inelastic Demand Relative Inelastic Demand
E=O E >0, E< 1
There can be five types of elasticities. The numerical value
of E may vary from zero to infinity (0 to (0). If demand is
completely unresponsive to the change in price, £ will be equal
Fixing Price in Agriculture 155
to zero. In this case, demand is said to be completely inelastic.
When the increase in quantity sold is proportionately smaller
than the decrease in price, it is a case of a relatively inelastic
demand.
In such a case, value of E is greater than zero but less than
one (0<E<1). When the proportionate change in the quantity
demanded is just equal to the proportionate change in its
price, it is case of unit elasticity. The value of £ in this case
is equal to one.
The demand is called elastic and the value of £ is greater
than 1(£>2) when the proportionate change in the quantity
demanded is more than the proportionate change in price.
Each of these five cases is illustrated graphically in the figure
above (a, b, c, d, e).
The elasticity of demand for individual commodities and
for farm products as a whole is very significant in connection
with their price determination. The demand for all food
products taken as a single commodity is inelastic. The highly
inelastic demand for farm products has very important
implications for understanding agricultural price policy.
Cross Elasticity of Demand
The relationship between the two goods X and Y can either
be substitutive or complementary, or it can even be neutral.
In the context of these relationships, the cross elasticity of
demand measures the economic relationship between
commodities on the demand side. The term cross elasticity of
demand may be defined as the ratio of proportionate change
in the quantity demanded of commodity X to a given
proportionate change in the price of the related commodity
Y. The cross elasticity between two goods, X and Y is measured
by:
eggs and meat, goods which are relatively expens ive per calorie
and contai n a larger amoun t of minerals, vitami ns or protein s.
It is lowest for cereals and potato es which may indeed be
inferio r goods. Agricu ltural produc ts which are indust rial raw
materi als, such as wool or rubber , may have a rather high
incom e elasticity.
If the change s in price are very small, the point elasticity
of deman d metho d is used for measu ring the respon sivene ss
of deman d. In case change s in the price are not small, the arc
elasticity of deman d metho d is applied .
The point elastic ity of deman d is define d as the
propor tionate change in the quanti ty deman ded resulti ng from
a very small propor tionate change in price. Symbolically, we
may write:
ep == dQ / dp
Q P
Q
or ep=d .£
dp Q
If deman d curve happe ns to be linear
Q == bo - b1P
dQ
Its slope -==-b
dp 1
ep==-b .£
Q
The simple st way of explain ing the point metho d is to
consid er a linear deman d curve. Let the straigh t line deman d
curve be extend ed to meet the two axes as shown below.
158 Agricu ltural Economics
p
o Q1 Q2 D Q
Fig.
We take any point F on this deman d curve which divide s
the deman d curve into two segme nts. The point elasticity is,
thus, measu red by the ratio of the lower segme nt of the curve
below the given point to the upper segme nt.
Arc Elasticity
P2 1---1 ------ 1.
Fig.
The above formul a is used to measu re the elasticity of
deman d only for infinitely small change s in price. If price
change s are apprec iable, we use the following formul a, which
measu res the arc elasticity of deman d.
Fixing Price in Agriculture 159
P1 +P2
-2- +P2 )
ep- - -
-
2
In the measu remen t of arc elasticity, we use the averag e
of the two price figures A and B as shown in Fig. above
(Origin al and subseq uent).
Howev er, this metho d gives an approx imatio n of the true
elasticity of the section AB of the deman d curve. Clearly, the
more convex to the origin the deman d curve is, the poorer the
linear approx imatio n attaine d by the arc elasticity formula.
Suppl y in Practi ce
By the supply of a comm odity we mean the amoun t of that
comm odity that produc ers are able and willing to offer for sale
at a given price. Supply may be carefully disting uished from
stock and produc tion. Stock constit utes the potent ial supply
but supply at a time is that part of the total produc e which
the farmer is willing to sell is the stock and is known as
marke table surplu s and the portion which is actually brough t
to the marke t at a particu lar time for sale is the supply of the
produc e and is labelle d as marke ted surplu s. Similarly, supply
of the farm produc e, someti mes, may be more than the curren t
produc tion if past stocks are also brough t to the marke t along
with it.
Factor s, Influe ncing Suppl y
Factor s which influe nce the supply of agricu ltural
comm odities are numer ous. Given below is a brief introd uction
to these factors:
1. The supply of an agricu ltural comm odity would depen d
upon its cost of produc tion, that is, the prices of factors
of produc tion which are involv ed in the produc tion of
said commo dity. For example, a rise in the price of land
will have a large effect on the cost of produc ing wheat.
Thus, a rise in the price of factors of produc tion will
160 Agricu ltural Economics
cause the supply of the produc t to decline and a fall
in the prices of factors produc tion may lead to an
increas e in supply .
2. Supply of an agricu ltural comm odity is also affected
by the price that comm odity comm ands in the marke t.
Other things remain ing the same, the higher the price
of the comm odity the more profitable will be to increas e
its supply .
3. The supply of an individ ual agricu ltural comm odity
will be affected also by the prices of other agricu ltural
goods. An increas e in the price of other comm odities
will make the produc tion of the comm odity whose
price has not risen relatively less attract ive than it was
previo usly. This mainly leads to change s in croppi ng
pattern in agriculhlre.
4. Supply of agricu ltural goods also depen ds upon the
state of technology. Agricu ltural techno logy helps in
bringi ng down the cost of produ ction and hence
increas es the supply .
5. There are a numbe r of other factors which affect the
supply of agricu ltural goods, viz. adequa te and well
spread -out rainfall, improv ement in irrigat ion facilities,
increa sed supply of chemical fertilizers and manur e
and better and improv ed metho ds of produc tion.
We may summ arise the above discus sion as follows: the
supply of an agricu ltural comm odity is a functio n of the price
of that comm odity, the prices of all other agricu ltural goods,
the prices of the factors of produc tion, techno logy and the
natura l factors. This statem ent may be expres sed in symbo ls
by writin g down what is called a supply function:
Where cjlls is the supply of agricu ltural good, n, Pll is the price
of that comm odity Pi ........... P -1 stand for the prices of all
lI
other agricu ltural goods, F....... F denote the prices of all
l 111
161
Fixing Price in Agricu lture
factors of produc tion, T is the state of techno logy and G stands
for 'natura l factors.
Law of Suppl y
As alread y mentio ned, supply has a functio nal relatio nship
with price. In order to know how the supply of an agricu ltural
comm odity varies with its own price, we will assum e other
things (which also affect supply , to be constant), i.e., q,,s = S(P,).
With this assum ption of other things remain ing the same, we
can define the law of supply as the quanti ty of a comm odity
produc ed and offered for sale will increase as the price of the
comm odity rises and decrea se as the price falls. Based on the
law of supply , we can constr uct an imagin ary supply schedu le
for an agricu ltural commo dity.
A supply schedu le repres ents the relatio n betwe en prices
and the quanti ties that sellers are willing to sell in the marke t.
Table given below shows the quanti ties of potato es that
would be produc ed and offered for sale each month at a
numbe r of alterna tive prices.
Table: A Supply Schedu le for Potato es
Price of Potatoes Quanti ty Supplied
(Rs. per qUintal) (Hundred quintals per montl,)
1 20 5.0
2 40 46.0
3 60 77.0
4 80 100.0
5 100 115.0
6 120 122.0
Quantit y
Fig: Supply Curve
Quant ity is measu red along OX and price along OY. SS
is the supply curve. The curve SS shows the relatio n betwee n
the price of the comm odity and the quanti ty produc ers wish
to sell. It slopes upwar d indicat ing that higher the price, the
greate r the quanti ty produc ers will supply . Furthe r, it has
been drawn on the assum ption of the consta ncy of all other
factors that influence supply other than price of the comm odity.
Suppl y Lags
All supply decisions take time to implem ent. We may say
that supply reacts with a time lag. In cases where the lag is
short, it may not matter if it is ignore d but in the case of many
agricu ltural commo dities, the lag is of critical import ance. The
simple st possible time lag is one in which this year's price has
no effect, whatso ever, on this year's supply . Farme rs while
decidi ng about what crop to plant and how much of it to plant
look to the existin g marke t price and thus next year's supply
depen ds on this year's price, while this year's supply is based
on last year's price. It means:
SI = f(P t - I)
Fixing Price in AgriculhLre 163
o Quantit y x
Fig: Poverse Supply Curve.
The situati on seems to be rather irrational, if we take into
accoun t only the price of the commo dity as the sole determ inant
164 Agricultural Economics
of its supply . But mostly, the price of inputs used in the
proces s of produc tion, the prices or the cost of produc tion of
other agricu ltural comm odities which can be produc ed as
alterna tives underg o a change , and given that deman d is
relativ ely price inelastic, it is just rationa l for the produc ers to
reduce produc tion of the first comm odity and produc e more
of other commo dities.
Second ly, supply may not fall in respon se to a falling price.
This reactio n is typical of agricu ltural produc tion.
Elasti city of Suppl y
When the elastic ity of supply is referre d to with no
qualifications, it is taken to mean price elasticity. It measu res
the directi on and extent of the seller's respon se to a change
in the price of his produc t, and is expres sed as:
Price Determination
Demand and supply can now be brought together in the
determination of market price. Let us imagine a wheat market
where there are many buyers and sellers who want to buy and
to sell. In a free market economy, the prices are determined
by the conditions of supply and the demand and the function
of the market price is to equate the two. In the short-run, which
in relation to agricultural commodities is often called the 11 stock
period", that is, the period after the harvest has arrived in the
market, the supply is given.
The market supply schedule shows only the amounts the
sellers would sell at different possible prices. The perishability
of the commodity, its storage costs, the price it can fetch in
other markets if they exist - these matters, together with the
sellers' price expectations and their cash positions, determine
the shapes of market supply schedules.
In the short-period, market demand schedule is also
influenced by buyers' expectations of future prices and
availabilities of substitute commodities, together with the price
elasticities of their demand and their cash positions.
The equilibrium price in the market period is the price that
equates the quantity demanded with the quantity supplied. At
this price, the buyers are willing to purchase certain amount
of wheat and the sellers are willing to sell exactly the same
amount. The market is cleared though some buyers and some
sellers remain disappointed since the equilibrium price is too
high or too low for them.
166 Agricultural Economics
Figure given below shows how equilibrium market price
is determined in the short period. DD and SS are the demand
and supply curves which have been drawn on the basis of
demand and supply schedules just discussed. The two curves
intersect at point A, which corresponds to the price OP} and
to the quantity bought and sold P1A. At this price (OP 1) demand
and supply are equal.
The slope of the demand function (D' (P)) is always negative.
The slope of supply function [S'(P)] is always positive in the
absence of external economies. Since the commodity is
homogeneous, a single price must prevail. The quantity
demanded must equal the quantity supplied at the equilibrium
price, so that,
D(P) - S(P) = 0 .... (1)
If the price rises to OP2, the quantity demanded would be
P 2B whereas the quantity supplied is p2c. The excess supply
BC would force the price down. On the reverse, if price falls
to OP3' we will have EF excess demand, which would force
the price up. Thus, OP 1 is the equilibrium price, or the price
which balances supply and demand.
y
D
s
'i=!
P-
Quantity
Fig: Equilibrium of Demand and Supply.
Fixing Price in Agriculture 167
When the equilibrium price is reached, neither consumers
nor producers have an incentive to recontract, any further. At
equilibrium price OP1 ' both buyers' and sellers' desires are
satisfied and no one can benefit from further re-contracting.
The equilibrium price-quantity combination must satisfy
both the demand and supply functions. The equilibrium price
is determined by solving the equilibrium conditions 1 for P.
The equilibrium quantity is determined by substituting the
equilibrium price in either the demand or the supply function.
Since the equilibrium price-quantity combination satisfies both
the demand curve and the supply curve, the above operation
is equivalent to finding the coordinates of the intersection
point of the demand and supply curves.
This model does in fact reproduce conditions in some
agricultural markets at single points of time or over very short
time periods. But there are imperfections in agricultural markets
and peculiarities in the supply of agricultural products which
make the model of only limited use.
Changes in Demand and Supply
Price changes are brought about by shifts in either demand
or supply curves or both. If supply remains unchanged while
demand increases, a higher equilibrium price is called for.
Figure given below illustrates a hypothetical situation.
y
'"
c:"
D
L -_ _ _-L_-'-_ _ _ _ _ _ X
o L Ll
Quantity of Wheat
Fig: Changes in Demand.
168 Agricultural Economics
In above figure, whereas the supply curve based on annual
production of wheat in a country X remains unchanged, the
demand curve shifts to the right (from DD to D,D1) indicating
an increase in the quantity of wheat that could be sold at any
given price. Under original market conditions, the price would
have been OP per quintal and the quantity supplied would
have been OL quintal. Due to a shift in demand from
DD to DP1 the new equilibrium is at the price OP1 per
quintal of wheat which corresponds to the supply of OL1 •
In some cases, price changes may be initiated by changes
in supply while the demand curve remains in the same position.
Figure given below illustrates the effect of shifts in the supply
curve for wheat.
y
o
L\ L L2
Fig: Changes in Supply
In above figure when the supply curve shifts to the left
(decreases), the price rises from OP to OP j and when it shifts
to the right (increases), the price falls to OP2 •
In case both the supply and demand curves change their
positions, the direction and theoretical amount of price changes
are less certain than in the cases just described.
Fixing Price in Agriculture 169
The Cob-Web
We now introduce an elementary dynamic theory of price
determination of agricultural products. In this theory, we
assume that farmers' output plans are fulfilled but with a time
lag and we try to show how planned changes in supply can
give rise; to oscillations in market behaviour. Agricultural
172 Agricultural Economics
markets subject to simple one-year time lag are illustrated
below.
y y
St = - B ... (2)
and D t = St ... (3)
where A and B are respectively the quantity demanded and
supplied which are independent of price and 13 and a are the
co-efficients determining the slopes of demand and supply
functions respectively.
Substituting (1) and (2) in (3), we have
A-AP=aP.
I-' t t - I -B
13 Pt = A+B -
A+B (a)"
Pt = A+ B ( a)
-p- ... (4)
P2 =
A+B+(_a)p'
fJ fJ I
174 Agricultural Economics
Expressing P 2 in relation to Pg
P = A + B + (_
2f3 f3 f3
a)
A + B + (_
f3
Po a)
P2
A;B +(_;)'
x p;a Po
A; B p p;
x f3 a x a +(- r Po
A+
p+a
B(P p-a x p+a)+(_
p
a)2 Po
p
Po
rH-rPo
The General Equation Concerning Pt in Terms of Po can now
be Written as:
With the help of the above equation, it is possible to explain
perpetual convergent and divergent oscillations.
30 '.
25
'.······2
'.
".
20
15
10
5
••••
o '. , D
200 400 600 800
Fig: Deman d Curve of MonopoIist.
It is eviden t from above figure that the produ cer can
establi sh his price in this case anywh ere betwee n zero and
Rs. 28 per unit. Any price higher than Rs. 28 per unit would
bring his sales to zero.
Fixing Price in Agriculture 177
In the following figure, the horizontal scale is the same as
in the previous figure representing sales in thousand units.
The vertical scale, however, is different. It represents total
rupees of revenue derived from the sale of different quantities.
The YR curve represents the total revenue that would be realised
from the sale of each of the quantities specified in the horizontal
axis.
The YR curve has been derived from the demand curve
DD in above figure ye is the total cost curve, which represents
the sum of fixed and variable cost for any given output.
y
!'" 70
......
0 60
"0
I::
«J
'";::I 50
Fe
40 TR
X
0 200 400 600 800
Thousand of Units
Fig: Profit Maximisation.
The net profit or loss received by the seller by selling any
given quantity of the produce is represented by the vertical
distance between lines YR and YC In case, the line TR is above
the line ye, a net profit is indicated, since gross revenue is
greater than total cost. In this figure, the greatest profit which
is reflected by the greatest distance between lines ye and YR
is found at a quantity of 440,000 units. Against this sale, the
net profit would be 13,000 (YR - YC). In order to maximise his
revenue, this is the quantity of produce a seller under imperfect
competitive conditions would wish to sell.
178 Agricultural Economics
The monop olist's total revenue and total cost can both be
expressed as function of output:
His profit is the differe nce betwee n his total revenu e and
total cost: n = R(q) - C(q)
To maxim ise profit, we set the deriva tive of the above
equati on with respec t to q equal to zero:
dir
dn
dq = R'(q) - C(q) = 0
or R'(q) = C(q)
The secon d-orde r condit ion for profit maxim isation
require s that
d 2 1C
d1C 2 = R"(q) - C"(q) < 0
Price Suppo rt
Unpla nned fluctua tions in supply do occur freque ntly in
agricu lture. In those econom ies where the price of such goods
are left to be determ ined by the free marke t forces, we
experi ence large price fluctua tions. In the case of many
agricu ltural goods, as alread y stated, the deman d is quite
inelast ic. In these cases, we find very large price fluctua tions
togeth er with the peculi ar situati on that when nature is
unexp ectedl y kind and farmer s are reward ed with a bumpe r
crop, they see their incom es dwind ling, while when nature is
moder ately unkin d and farm suppli es fall unexp ectedl y,
farmer s' incom e rises. "Thus, during a year, the marke t price
Fixing Price in Agriculture 179
of food grains is determined predominantly by the size of the
harvest and the price elasticities of consumer demand for
foodgrains. Because of generally low price elasticities of
demand for food grains, it needs a disproportionately large
rise in order to restrict the demand to a somewhat smaller
harvest; and it needs a disproportionately large fall in price,
to expand the demand to a somewhat large harvest. The market
price of food grains is thus liable to large fluctuations from
year to year, firstly because of fluctuations in the size of the
harvest and secondly because of the generally low price
elasticities of demand for foodgrains."
On account of the generally low price elasticities of
consumer demand for food grains, the fluctuations in prices
are likely to be more pronounced than warranted by
fluctuations in the harvest. Thus, in a year of bad harvest, the
rise in price might more than compensate the fall in yield and
the producers might actually reap a higher total revenue. On
the other hand, in a year of good harvest, the prices might fall
so low that in spite of the high yields, the producers might end
up with a smaller total revenue. There is, therefore, a strong
case for minimum support prices of food grains, particularly
in a year of good harvest.
From the consumer's point of view also, stability in
food grains prices is highly desirable. "It does not help the
consumer to have a low price and high consumption in a year
of good harvest and a high price and low consumption in a
year of bad harvest. Therefore, he would prefer the price to
be supported in a year of good harvest and thus not be allowed
to fall below a certain minimum, provided a revenue obligation
is accepted and in year of bad harvest, the price is not allowed
to rise above a certain maximum. Thus, in the view of the
consumer, a maximum ceiling price is a necessary corollary
to a minimum support price."
It is not easy to give a precise definition of "support price".
It can be differently defined with reference to the objectives
180 Agricultural Economics
of the price policy in view. Among the three objectives of price
policy, viz. stability, equity and growth, growth objective is
much more relevant in the present context of many developing
countries. Considering this objective, the minimum support
price can be defined as a "reserve price" announced in advance
of the production period and more or less corresponding to
a forward price, which, in conjunction with other measures,
will ensure the desired quantities of production and desired
relationship between each other."
In simple words, support price may be defined as the price
at which the government would be under obligation to buy
the entire stocks that may be offered to it for sale. The support
price would have no direct incentive role to play, but would
insure farmers against the risk of prices falling below a
particular level. The support price would also have to be such
as would not inhibit adoption of improved technology by
progressive farmers.
Under the support price policy, government attempts to
stabilise the incomes of farmers by entering the market itself,
buying and selling in the open market when there is a shortage.
An important question that must be answered is: "What
should be the minimum support price?" Guidelines for
determining support prices of agricultural products would
depend on the objectives that are sought to be achieved.
Objectives of agricultural price support policies can be and are
in fact diverse in different countries. By definition a support
price policy assures the farmers against a fall in prices beyond
the stipulated level. In some countries (mainly advanced),
such price insurance has the primary objective of maintaining
the general level of farm incomes. In several other countries
(especially developing countries), the main objective of support
price policy is to help augment overall agricultural production.
Tht:s, on the basis of the primary objectives that they seek to
achieve, the support price policies can be categorised as either
"Income-oriented" or "Production-oriented".
Fixing Price in Agriculture 181
In most developing countries, including India, the main
objective in the present context is to step up the rate of growth
of agricultural production so as to match the growth of
consumer demand. The support price policy, which is
production-oriented, therefore, would seen to have greater
relevance. The objective of improving agricultural incomes
will be achieved as a sequel to increased production and
productivity.
For the fixation of minimum support price, some
economists believed that it should be based on the cost of
production. But this is not so simple. The main questions that
need to be answered are: (a) What costs to be considered? Cost
of production of a commodity depends on a number of factors
which vary from farm to farm, e.g., size of the farm, soil type,
cropping pattern, farm investment as well as technique of
production employed. It is also observed that farms in a
homogeneous tract do not incur uniform or similar costs. Also
standardisation of agricultural produce is not easy as the quality
of produce depends mainly on natural factors, among other
things. As such it is not easy to work out the average cost of
prod uction.
To avoid these difficulties, support price has to be related
to the costs of farms for which the inputs are mostly purchased
and not home produced. The reserve price has to be related
to the cost of production of a "model" commercial farm, for
which alone the cost is a measurable concept. The reserve price
may thus be defined as "the price that ensures the cost of
production of a commercial farm under normal weather
conditions." Thus defined, it will vary from year to year,
depending upon changes in the conditions of supply, and
hence it will have to be flexible.
The cost of production approach, though useful for some
purposes, is essentially a backward-looking approach. It cannot
ensure the necessary stimulus for increasing production. For
this purpose, support prices must have an element of incentive.
182 Agricultural Economics
The price mechanism is a highly sensitive and delicate
instrument and the repercussions of a change in price in one
area would be so widespread that it seems almost an impossible
task to take into account all of them and arrive at an integrated
price structure that may be truly described as in equilibrium,
both over space and time. Nevertheless, attempts to collect
and analyse as much empirical evidence as possible will have
to continue and to be intensified so as to derive supply response
co-efficients, which can serve as guidelines for determining
support prices. However, we may be sure that the primary
objective of the support price policy in our country has to be
that of augmenting agricultural production and not of achieving
income redistribution between agricultural and non-
agricultural sectors. The guidelines for determining support
prices will have to be evolved keeping this objective firmly in
view.
According to this programme, the government should fix
the price of farm produce at a level which is higher than the
market price and to buy from the farmers whatever surplus
are not cleared in the market. In the following figure, Po is the
market price of, say, wheat.
p
D
Arc Elasticity
D
o QJ Q2
Q
Fig: Government Policies Designed to Stabilise Price.
The support price by the Government pegs the prices at
Pl . At that price, according to the demand curve DO' only OA
Fixing Price in Agriculture 183
units of wheat are taken by consumers. But on the other hand,
OB units of wheat are offered for sales. Thus, the government
is under the obligation to purchase this surplus supply (AB)
and keep it in the buffer stock.
In case this policy is successful, we will, firstly, have smaller
fluctuations in the price of farm produce than there would be
if price were determined on the basis of a completely free
market. Secondly, total revenue of the farm producers will get
stabilised in the face of fluctuations in production.
Long-term Considerations
In the short period, since the supply of agricultural produce
cannot be increased, the price which the farm operator receives
may be determined by the intersection of existing demand and
existing supply. Such price determination is more or less
independent of the inputs or costs incurred by the farm
producers. In the long-run, the size of production is, however,
positively related to the inputs or costs incurred. The producer
knows that he can expand production by increased inputs or
costs. But he would naturally not do it, unless it paid him to
do so. Thus, the inputs or the costs that the producer incurs
get related to the price that he expects.
Under these conditions, the demand for minimum support
price arises on the ground that the producer must be assured
of minimum price which he may count upon and which may
provide a basis for production decisions regarding inputs and
costs to be incurred. Higher support prices fixed by the
government may stimulate agricultural production by causing
farmers to use more labour and other variable resources inputs
to reach higher output levels with existing methods of
production, or by inducing investment and the discovery and
adoption of new agricultural technologies that result, in new,
lower-cost production possibilities by farmers. Thus, a surplus
of AB unit., of output is created in the market. This surplus
is purchased by the government at the support price announced
by it and kept in the buffer stock.
184 Agricultural Economics
The purpose of fixing support price, therefore, is to assure
the farmer that in case market prices tend to go below then,
government will step in and purchase all quantities offered to
it for sale at the guaranteed prices. It is obvious that the
fixation of support prices does not rule out the possibility of
market prices being higher than the support prices. In fact, in
a situation where demand is increasing at a faster rate than
supply, market price can generally be expected to remains
higher than the support price.
Behaviour of Agricultural Prices in India
Agricultural prices, unlike manufactured goods prices,
fluctuate more violently as the agricultural sector is highly
influenced by the vagaries of nature. The prices of agricultural
goods in India have been rising continuously since
independence except during the First Five Year Plan, When
the prices actually fell.
Table: Trends in Wholesale Prices of Agricultural Goods
Year Index Number Per cent Increase
1952-53=100 Decrease
1950-51 110.0
1955-56 88.0
1956-57 104.5 + 18.8
1957-58 107.4 + 2.8
1958-59 114.0 + 6.1
1959-60 116.5 + 2.2
1960-61 123.8 + 6.3
1961-62 115.5 - 6.7
Base Year
Weights (100.0) (29.0) (46.1)
1950-51 111.8 101.8 110.0 92.5
1955-56 92.5 99.6 88.0 113.2
1956-57 105.3 105.6 1045 101.1
1957-58 108.4 108.2 107.4 94.8
1958-59 112.9 108.1 114.0 94.8
1959-60 117.1 111.3 116.5 95.5
1960-61 124.9 122.8 123.8 99.2
1961-62 125.1 124.6 122.9 101.4
Base Year
Weights (100.0) (32.30) (33.2)
1962-63 103.8 103.2 102.3 100.9
1963-64 110.2 105.9 108.4 97.7
1964-65 122.3 109.4 130.9 83.6
1965-66 131.6 117.0 141.7 82.6
1966-67 149.9 125.2 166.6 75.2
1967-68 167.3 129.1 188.2 68.6
1968-69 165.4 132.8 179.4 74.0
1969-70 171.6 139.7 194.8 71.7
1970-71 181.1 149.7 201.4 74.3
Base Year
Weights (100.0) (49.87) (40.4)
Base Year
Weights (100.0) (49.87) (40.4)
The above table gives data on price movem ents during the
three period s, viz. 1950-51 to 1961-62 to 1962-63 1970-71 and
1971-72 to 1983-84. From the price trends preval ent in the first
period , no concrete inference can be drawn since the prices of
manuf acture s as per cent of the prices of agricu ltural
commo dities were more than-lOO in 4 years and less than
100 in 4 years.
Howev er, in the second (1962-63 to 1970-71), this
percen tage has been less than 100 for all years which clearly
points to the fact that agrk111tural terms of trade have been
favourable during this decade. in recent years, i.e., from 1971-72
to 1986-87, the prices of manufartIJ.red goods seem to be rising
200 Agricultural Economics
faster than the prices of agricu ltural goods. Excep t for one
year, the relativ e manuf acture d prices have been higher than
the agricu ltural prices. The terms of trade, therefo re, seem to
have gone agains t the agricu ltural sector.
The above metho d of determ ining the terms of trade
betwee n agricu ltural and manuf acture d sectors , howev er, has
been criticis ed by many econom ists. Kahlon and Tyagi note
that the index of manuf acture rs" and index of agricu ltural
U
U
SI. Sector Ninth 1997-98 1998-99 1999-2000 2000-2001 2001-02 10th plan 2002-03
No. Plan BE AE" BE AE" BE AE BE AE" BE AE" Outlays BE AE"
Outlays$
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Agriculture and
Allied Activities # 42462 6974 5929 8687 7698 8796 7365 8281 7577 9097 8248 58933 9977 7655
2 Rural Development 74686 11156 10074 12203 10985 12252 11281 11349 9852 13444 14235 121928 15778 19753
3 Special Area
Programmes 3649 781 874 1535 1184 1630 1514 1022 1045 1146 919 20879 1046 1066
4 Irrigation and Flood
Control 55420 11220 9905 13444 10814 15672 14210 16234 13529 16528 14552 103315 16964 11965
5 Energy 222375 37111 31793 45134 35572 43273 35810 44856 36613 49103 37145 403927 53781 44710
6 Industry and
Minerals 65148 13319 10306 13901 7979 10918 7248 11250 6866 10487 7942 58939 10608 8776 ::t:.
'1 Transport 119373 20661 18101 25423 20347 27104 23463 31271 25734 35834 29918 225977 44258 35244
8 CommunicatIons 47280 13367 10131 14887 11376 16822 14039 19473 14183 20300 18083 98968 19551 13057
9 Science, Technology
and Environment 18458 2431 2004 3289 2443 3471 2942 3927 3557 4042 3670 30424 4783 4160
10 General Economic
Services 14580 2403 1811 3588 3071 4601 2452 4607 2538 8929 2948 38630 4557 4995 M
11 Social Services 183273 34260 26867 41359 38738 45154 38439 48368 41336 56373 46474 347391 63006 56954 Cl
;::!
12 General Services 12496 2221 1961 2458 1374 2569 1847 2721 1649 3608 2181 16328 3588 1868
-.Q
Cl
Total 859200 155905 129757 185907 151581 192263 160608 203359 164479 228893 186315 1525639 247897 210203
l1
SI. Sector 2003-04 2004-05 2005-06
BE RE"'**
2006-07
BE RE"
lIt/I Plan
Qutlays
2007-08(#)
BE RE"
2008-2009
BE ....;:::t
H
2
Allied Activities
Rural Development 16029 19858 17634 18579 23931 27214 30711 30458 301069
26329
16706 17511 18972 ....;:::t
4939 2381 4547 4904 5522 5840
3 Special Area 1848 1733
Progranunes 411 411
::x:.
26957 25007 33189 32120 210326 507
4 Irngation and 17751 14499 21111 19471
Flood Control 93815 r>
77356 71306 90499 88296 854123 79158 93815 l::
5 Energy 59689 60174 65965 60375 28836
15303 13512 18213 17017 153600 20434 28836
6 Industry and 10101 7758 10756 10121
Minerals 59992 58915 72055 74625 572443 71589 68930 84177
7 Transport 42309 36186 44481 38690 21937
17773 20366 18121 95380 25812 16599
lcations 14914 12897 11764 9279 12226
8 Commun 7520 6411 8395 7258 87933 8816 7742 9283
9 Science, Technology 5047 4417 6030 5513
and EnVironment
10 General Economic 10026 8691 62523 3632 3043 6052
7123 4502 13462 5067 10080 7146
Services 103308 131989 127738 1102327 83951 78798 100778
62621 77549 79244 106370
11 Social Services 68946
4159 4087 42283 829 533 1149
3201 2270 3266 3119 2695
12 General Services 2179
441285 431238 3644718 319992 324762 375485
255883 236664 287070 263434 361239 351629
Total
$ : Indicate s Ninth plan realaizah on.
in to account for Actual Expendi ture figures as the figures
** : For the Centre some of the revised esb.mate figures have been taken
for some of the sub-head s are not avallable.
ment for Centre and State in place of actual Expenditure.
*** : Revised Expendi ture has been taken into account for some Head of Devilop
# : For Centre only, as figures for States & Uts are not available yet.
Only Revised figures for centre has been given in place of Actual
Expendi ture.
## : For Centre only,as figures for States & Uts are not available yet. N
0
VJ
Source: Planning Commis sion, New Delhi.
N
Share of Public Sector Outlays and Expenditure under Agriculture and Allied Activities dllring 0
Ninth Plan (1997-98 to 2001-02), Tenth Plan (2002-03 to 2006-07) and Annual Plan *'"
(2007-08)and Eleventh Plan (2007-12)11.
(Rs. Crore)
2 3 4 5 6 7
-.
Annual Plan (2000-01) ** 8281 7577 203359 164479 4.1 4.6 Oq
....
Annual Plan (2001-02) ** 9097 8248 228893 186315 4.0 4.4
Tenth Plan (2002-07) 58933 56997 1525639 1489395 3.9 3.8
Annual Plan (2002-03) ** 9977 7655 247897 210203 4.0 3.8
Annual Plan (2003-04) ** 9948 8818 255883 236664 3.9 3.7
t'Ti
Annual Plan (2004-05)** 11109 10778 287843 263434 3.9 4.1 "
0
;:l
0
Annual Plan (2005-06)**
Annual Plan (2006-07)***
13840
16163
12760
16987
361239
441285
347857
431237
38
3.7
3.7
3.9 -."'"
::=
Contd ... '1"i
;:s
F,ve Year Plan/Allllual Plan Agrtculture and Percent Share of Oq
Allied ActivIties' Total Agrtculture and Allied "U
""'!
ActIVities to Total ;:::.
Plan Actual Plan Actual Plan Actual
Outlays Expenditure Outlays ExpendIture Outlays Expenditure
Si'
Oq
2 3 4 5 6 7 ....
;:::.
Eleventh Plan (2007-12) 136381 NA 3644718 NA 3.7 NA
....
;;::
Annual Plan (2007-08)# 8558 8544 319992 292337 2.7 2.9
Annual Plan (2008-09)## 10075 NA 375485 NA 2.7 NA
Includes Crop Husbandry, Ammal Husbandry, Dairy Development, Agricurtural Research & Educab.on, Forestry & Wild I1fe, Plantation, Aglcultural
Markeb.ng, Food Storage & Warehousmg,SOlI and Water Conservab.on, Agncutlural FinanCial Insb.tub.ons, other Agncultural Programmes and
Cooperab.on
** For the Centre, some of the revISed estimate hgures have been taken into account for actual expenditure figures, as the figures for some of the sub-
heads are not available.
*** - ReVised Expenditure has been taken mto account for some Head of Development for Centre in place of actual Expenditure.
# For Centre only, as hgures for States and UTs are not available yet. Only ReVised figures for Centre has been givlen.
## For Centre only ,as hgures for States and Uts are not available yet.
"- Data pertam to eleventh Five Year Plan are as approved by the National Development Council (NDC) in Its meeting held on 19th December,2007.
NA . Not Available
Source: Planning ComnusslOn, New DelhI.
N
o
c.n
206 Fixing Price in Agriculture
Labou r in agricu lture constit utes one of the most impor tant
factors of produc tion as machin e and labour cannot be perfec t
substit utes in the agricu ltural produc tion process. In spite of
the signifi cant technological advanc e in this sector, man will
contin ue to be more import ant here than in the rest of the
econom y. The associa tion of labour with agricu lture is as old
as the farm occup ation itself. A discus sion on labour in
agricu lture shall have to be develo ped in a two-di mensio nal
format . On the one hand, man (labour) is a consum er and on
the other, he is a produc er. This imbala nce betwee n how much
he produc es and how much he consum es has always placed
countr ies differentially. If P denote s the amoun t produc ed and
C, the amoun t consum ed, then the relatio nship betwee n P and
C can be expres sed as:
O=P -C=O
A positiv e D is an indicat or of a farm sector produc ing
more than what is consum ed by the farm labour force and
hence the surplu s can be used in the non-fa rm sector. Zero or
negati ve values of D are not in tune with the proces s of
econom ic develo pment .
The supply of labour and the deman d for it form yet
anothe r impor tant line of discus sion on the subjec t. The
inequa lity betwee n the supply of and deman d for farm labour
208 Agricu ltural Economics
Supply of Labour
Supply of labour force in agriculture depends upon the
size of population. In traditional static agriculture, the size of
farm labour force directly varied with the size of total
population. Alternative employment avenues being non-
existent, an increase in population straightaway led to an
increase in labour force in the farm sector and vice-versa.
In the event of farm and non-farm sectors existing side by
side, the agricultural labour force depends upon the residual
formed by the rate of growth of population and the rate of
growth of non-agricultural employment. The state of economic
transformation from traditional static to modern dynamic
society greatly influenced the supply of farm labour force.
On the demographic side, we shall have to examine different
theories of population growth and the factors affecting it.
Theories of Population Growth
Theories of population growth are based on two different
schools of thought - naturalistic school and sociological school.
The former emphasises factors like fecundity, fertility, sterility,
supply of food and phYSical resources, density of population
and the standard of living as influencing the growth of
Agricultural Labour 211
population. Latter school of thought lays stress on institutional
setup devised by human beings and emphasises social rather
than environmental factors as influencing population growth.
Cultural pattern and social behaviour are considered more
dominating than the natural factors.
The thought developed by the naturalistic school is founded
on Malthusian theory of population growth. This theory is
based on the belief that the size of population can be limited
by man himself while the capacity to produce food is limited
by nature. His main contention was that the rate of growth of
population would always outpace the rate of growth of
foodstuffs and in order to maintain balance between the size
of population and the volume of food availability, nature, will
come down on population with a very heavy hand in the form
of famines, pestilence, epidemics, etc.
Malthus, in his thinking obviously faltered on two points,
viz., on man's inventive competence and on his acceptability
of a cultural pattern of a controlled birth rate. Malthus did not
foresee the possibilities of a technological revolution enabling
man to produce more with less land at his disposal.
On the other hand, the social school of thought believed
that man, while taking decisions regarding the size of the
family, 'shall carefully consider the place of children in family-
life goals and shall, in the process, be affected by institutional
setup such as religion, social ceremonies and law, the nature
and place of work of the women and parental motivation and
expectations from their children. Besides, the size of population
can also be regulated by formulating public goals relative to
population. These goals may be so fixed as to slow down the
rate of growth of population, to prevent or encourage at'
increase in population, to improve the quality of population
and to secure a distribution of population relative to natural
resources in different regions.
On the side of population growth, therefore, there is no
limit to the supply of labour force to agriculture. In fact, the
world is seized with the problem of over population relative
212 Agricultural Economics
to its requirement and in spite of the voluntary measures to
regulate the growth of population, there appears to be no
danger of short supply of labour force in the near future.
Alarmed by the gravity of current trends in population growth,
the suggestions for zero rate of growth are already put forth.
The suitability or otherwise of such a strategy is being debated
and investigated.
Factors, Affecting Population Growth
The size of population at a point of time depends upon
the difference between births and deaths and corrected by the
difference of in-migration and out-migration from that
geographical territory. For the world, as a whole, the migrations
are of no effect. Factors affecting population growth are,
therefore, those that affect the births and deaths. Allowing for
differential applicability and acceptability owing to differences
in sociocultural background, religion and geography, the main
factors that effect births are as follows:
1. Marriages.
2. Reproductive capacity.
3. Economic conditions.
4. Social, cultural and religious influences.
5. Level of education.
6. Government policies.
Marriages play a significant role as a factor affecting
population growth. Three points have to be noted in this
regard; number of marriages, the age at the time of marriage,
particularly of females and the divorce rate and incidence of
legal separations.
Populations with legal, religious and social sanctions for
remarriages and more than one marriage with previous spouse
or spouses living are prone to grow at a faster rate than other
populations where these sanctions are not in vogue. Similarly,
marriages at younger ages enlarge the reproductive age span
Agricultural Labour 213
and hence a higher rate of growth of population. Easy divorces
and legal separations act as depressors on population growth
and the extent to which the rate of growth can be limited is
directly related to the intensity of these occurrences.
Reproductive capacity, that is, physical capability of couples
to produce children (also known as fecundity) is an equally
important factor affecting the number of births. A higher
reproductive capacity with a larger reproductive span shall
obviously lead to higher rates of population growth and vice-
versa. Economic conditions of people are said to influence their
decisions with regard to births of children. It is generally
believed that better economic conditions are followed by lower
birth rates.
The reason being that people do not want to allow their
standard of living to fall owing to the larger family size and
that with better economic conditions, more time is devoted to
recreation. Social religious and cultural influences also have
a considerable effect on the birth rate. Societies which consider
birth control and abortions, etc. anti-social and anti-religious
record a higher birth rate compared to other societies. Education
too plays a significant role. Lastly, government can always
formulate policies to regulate the birth rate. It the government
is interested in checking the birth rate, it may withdraw
incentives like free education to the third child, subsidised
rations, free medical facilities, etc. Measures contrary to these
may be taken in case government wishes to increase the birth
rate.
Factors, Affecting Death Rate
1. Level of medical technology.
2. Economic conditions.
3. Infant mortality rate and expectation of life.
The level of medical technology is perhaps the single most
factor influencing the death rate. Acceptability of advanced
medical technology by the people is very crucial. Death rates
214 Agricultural Economics
have been reduced considerably by advances in medical
research. Better economic conditions help reduce tensions on
human mind and provide improved living conditions and
socio-economic atmosphere. This goes a long way in reducing
the death rate. Lower mortality rate among infants and older
people enlarges the reproductive capacity of a society and
may lead population to increase.
On the demographic side, therefore, the supply of farm
labour force is directly linked with the overall size of population
which, as we have seen, depends on the size of birth rates and
death rates and, of course, on in-and-out migrations from a
locality, country or region.
Considering the supply of farm labour force as a function
of residual of population growth on the one side and growth
of non-farm employment, on the other, it shall depend upon
the nature and rate of expansion of the non-agricultural sector.
Further, the growth of non-farm sector is likely to generate
more employment and with stagnant rate of population growth,
the residual shall tend to decline and hence restrict the supply
of farm labour force. But note shall have to be taken of the
nature of growth in the non-farm sector. If it uses capital-
deepening devices, the rate of growth of employment may fall
far short of the rate of growth of population and hence the
residual will tend to increase and in the process, increase in
the supply of farm labour force.
The developing countries of the world that have chosen
to expand the non-farm sector at a faster rate are exactly faced
with such a problem because the non-farm sector under the
compulsions of market and international standards has used
more capital deepening devices and failed to generate
employment at a higher rate. In any case, even when non-farm
employment expands at a rate equal to the rate of population
growth, the technological advances would enable the
production of agricultural products at the desired levels with
lesser manpower
Agricultural Labour 215
Demand for Labour Force
Demand for agricultural labour force is influenced by the
size of the farm, the system of farming and the degree of
technological development.
In general, it would appear that larger the size of farm, the
greater will be the requirement of labour and vice-versa. But
in practice, it does not work in that fashion always. To some
extent the direct relationship between farm size and labour
requirement works all right but beyond that it may turn out
to be otherwise; the turning point shall, of course, demand
upon the system of farming and technological development.
Small farms normally require more labour for a holding of a
given size than large farms practising the same type of farming.
The system of farming is equally important. Intensive
system of farming would, in general, require more labour per
unit of land than is required under an extensive system of
farming. In the light of our earlier argument, it follows that
intensively-operated small farms would require a larger
amount of labour force. Farming is such an enterprise where
the required standards cannot be fixed. Besides size and system
of farming, there are a variety of other factors that cause
variations in the labour requirements. For example, the
cropping pattern, dairy and poultry farms and horticulture,
etc. have different labour requirements.
An acre of rice cultivation may have a different requirement
of labour compared to an acre of wheat cultivation or potato
cultivation and so on. Labour requirement on vegetable farms
may significantly differ from that on floriculture and
horticulture. Secondly, sensitivity of individual crops suddenly
gives rise to more or less labour requirements during particular
operations. Labour requirements for keeping livestock differ
with the type of livestock kept and the system of management.
There will be lesser demand for labour if cows are to be looked
after in an outdoor pasture area than these are to be looked
216 Agricultural Economics
after indoors. system of milking cows may generate
lesser demand for labour than indoor hand milking system.
The nature and operational character of farming is such
that precise labour requirements cannot be estimated. The
services of a worker or a group of workers of different
specialisations may be needed every day though not for a full
day on small farms while on large farms, the situation may
be different. Seasonality of agricultural employment is a very
serious problem. This subjects the demand for labour to
variations from one operation to another and from one
seasonally more sensitive crop to another of lesser seasonal
sensitivity. Shortage of labour is felt in peak seasons and
labour is regarded surplus in slack seasons.
In regions where farming is predominantly dependent
upon the monsoons, variations in demand for labour occur
due to the nature and amount of rain recorded. If rains come
on time, the agricultural operations run as scheduled and
accordingly generate demand for labour on the usual pattern.
Untimely rains cause variations in labour requirements as
well. If, on the other hand, rains fail in a particular season, the
demand for labour is completely upset and farm labour
suddenly becomes redundant. On the contrary, acute shortage
of labour is felt during the crop operations closely linked with
rainy season.
To avoid shortages of labour and labour redundancy,
farming has to be managed more scientifically and in a way
so as to permit reasonable adjustments as and when required
to avoid waste and overburden. Such a strategy can be worked
out in two ways. The farm enterprises may be selected in such
a combination so that the regular workforce finds full-time job
every day and every season. Alternatively, a minimum regular
workforce may be maintained and supplemented by additional
stock as and when required. The two approaches involve the
questions of farm management and labour management.
Agricultural Labour 217
Traditional agriculture did not pay much attention to
management problems as such but relied heavily on the use
of casual labour during peak seasons. With advanced levels
of economic development, the casual labour disappeared owing
to expansion in non-farm employment, as is the case in the
developed countries at present. This stimulated the need for
better farm and labour management. In the developing
countries of Asia, however, casual labour is available and used
during the peak seasons. But the overall considerations of
farming enterprise demand that farm management be
strengthened and improved for obtaining better results from
agriculture.
In many cases, peak agricultural operations are managed
by pooling of labour force, particularly on small farms. This
practice is in vogue in many Asian villages and shall continue
to be there for quite sometime. Besides, labour problems are
also solved by using contract labour and overtime labour.
There is an advantage in using contract labour as it is self-
organised and does not need permanent supervision as in the
case of casual labour.
Overtime labour has a special place in agriculture owing
to its peculiar nature compared to industrial production. Some
of the farm operations have to be completed within a specified
time dictated by nature and in such cases, longer hours of
work have to be put in if casual or contract labour is not
available. Cultivation of land, sowing, weeding and harvesting
are such operations as would necessitate the use of overtime
labour since the operations have to be completed in time.
Similarly, keeping and supervising the livestock needs overtime
labour because several jobs have to be done at fixed times and
in a regular programme. There is, however, a limit to the use
of overtime labour imposed by the physical capacity of a
worker.
In these days, however, emphasis is being laid on farm
management to ensure optimum-utilisation of farm labour
218 Agricultural Economics
force. Cropping pattern is so designed as to create demand for
labour in one crop when it is relieved from the cultivation of
another crop. Even daily adjustments are possible by combining
small farms of vegetable cultivation poultry and dairy units
with major crop operations. In the case of seasonality, non-
farm employment is created by setting up small agro-based
industrial units in the village itself.
We have explained how the size of farm and system of
farming influence the demand for labour in agriculture. We
shall now turn to the third factor, viz., level of technological
development. The nature of technological progress greatly
influences the demand for farm labour force. The history of
the developed countries reveals that technological progress in
agriculture tended to reduce the demand for farm labour.
The farming operations became more mechanised and
displaced labour for use in non-farm sector, perhaps the
Western industrialised countries and the United States were
under compulsion to do so as the rates of population growth
were low compared to the rates of growth of employment.
Japanese experience shows that technological advancement in
agriculture can be labour-intensive in character. It depends
upon what input-mix and what type of machines are used on
farms. Japanese developed an intermediate technology where
inputs like chemical fertilizers and mini-tractors stimulated
greater demand for labour rather than displacing it. New
agricultural technologies result in income effect in that the
efficiency of labour is increased and real income gains increase.
This income effect is associated with a substitution effect.
The temptation to maximise gains from new technologies,
and as a result to enjoy more leisure leads to the substitution
of machine for man and displaces labour from the farm. On
the other hand, if it suits to avoid heavy cost of machines and
their maintenancE, an increased dose of labour may be put in
to optimise returns from new technology through intensified
agricultural operations.
Agricultural Labour 219
There is a strong controversy going on whether new
agricultural technologies have displaced farm labour or
intensified its use. Ample evidences for and against this
argument have been given but no definite conclusions can be
drawn. The nature and level of technological progress shall,
however, continue to considerably influence the demand for
farm labour force.
Efficiency of Farm Labour
The simplest measure of labour efficiency is the amount
of output per worker. Productivity of farm labour is directly
linked with the size of labour force, the quality of labour force
and the nature and level of technological development. Changes
in the productivity of labour are connected with the process
of transformation from static to dynamic agriculture.
Total Product
Marginal Product
W ..................•......••,.::::.::::.....•........•..•..\, ......•.•..•:;:
.,...::::
.... ....=
.............__
...•......... \.... Subsistence Wage
................ ······..h··........................ u
............. .
Input of Labour
Fig.: Labour Productivity
It is evident from above figure that the level of subsistence
living OW is relatively low and average productivity of labour "
is much above this level. This is particularly relevant if land
productivity is high on new lands brought under cultivation
by the additional labour force. But if the soil quality is poor
and the possibility of extensive farming is limited, under static
technology, the rise in labour force will not permit the average
labour productivity to rise above the subsistence level'. Such
situations may often be found in the hill areas.
y
Total Product
Subsistence Wage
W --- ....t...................................................
Average Product
\i
Input of Labour
Fig.: Labour Productivity
Agricultural Labour
221
In above figure, the subsist ence requir ement OW is as
usual low . The averag e produc tivity curve does not rise beyon d
OWan d increas es in total produc t are also moder ate.
As agricu lture sheds its static charac ter and tends to be
dynam ic, change s in technology may result in the rise of the
produc tivity of labour even when the size of labour force is
increa sing.
Quali ty of Labour Force
Produc tivity of farm labour shall greatly depen d upon its
quality , both physic al and mental . Physical quality of labour
force refers to sound health, stamin a and race characteristics.
Differences in the health of labour force result in produc tivity
differe ntials. Usuall y people living in tempe rate climat ic
condit ions enjoy better health than those living in hot and
humid climatic conditions. Sound health gives greate r stamin a
to stand the odds of the occupa tion and to work overtim e.
Race charac teristic s are also a factor that influences quality of
labour . Punjabis, for examp le, have shown exemp lary physic al
fitness in bringi ng about a revolu tion in farmin g both in
Pakist an and India. On the other hand, farmer s living in the
rest of the countr y and enjoying same farm condit ions have
not been able to keep pace with their Punjab i counte rparts.
Menta l quality of labour force shall depen d upon the level
of educat ion, extens ion service s and agricu ltural trainin g
progra mmes. Educa tion, more particu larly, functio nal and
vocatio nal, rends to improv e the manag ement capabilities of
farm labour and with the same amoun t of work they can
achiev e better reward s.
Extens ion services are equall y impor tant to narrow the
gap betwe en the farm labour and farm scienti st. Unless
labora tory results are made to reach the farmer, his menta l
horizo n canno t be widen ed and his capabi lity of enhanc ing
farm produc tivity canno t be explored. Agricu ltural trainin g
progra mmes have a significant effect on improv ing the menta l
222 Agricultural Economics
health of farm labour force. Agricultural universities and other
such institutions are rendering useful service in this regard.
Level of Technology
The nature and level of technological development has a
great influence on labour productivity in farming. Improved
methods of farming, better quality seed, fertilizers and
pesticides and improved tools and implements have resulted
in considerable increase in farm labour productivity. As already
mentioned, Japanese methods of cultivation are not only labour
productivity enhancing but are also labour-intensive in
character.
Such technologies increase employment per unit of land
and also increase productivity per unit of employment.
Replacement of outdated tools and implements have enabled
better exploitation of soil qualities resulting in increased output
per unit of labour. Replacing a plough with a tractor, in
particular, and hand operations with mechanical operations,
in general, have enabled the developed countries to raise several
times the farm output with fewer farm workers.
Therefore, whether it is a labour-using and capital-saving
technology, as in the Japanese case, or a labour-saving and
capital-using technology, as in the case of developed west
European countries and America, labour productivity can be
enhanced enormously with technological development. The
amount of capital with which a farm worker has to work
determines the level of his productivity on different farms and
in different situations.
Labour efficiency also depends upon how farm enterprises
are combined, the diversification of production and
supervision. Situations often arise in farming when the total
workforce cannot be used full time in-one single enterprise
and combination of enterprises have thus to be chosen in such
a way that the labour force is optimally used. The efficiency
of labour will certainly be poor if such enterprise combinations
cannot be worked out.
Agricultural Labour 223
Modern agriculture has no longer remained static in
character and possibilities of multiple cropping have increased
owing to new seed-fertilizer technology. This has abo enabled
the optimal use of farm labour force and resulted in better
labour efficiency. Diversification of crops to suit different
seasons is another way of increasing labour efficiency by
utilising the total workforce for full time through different
seasons. The management and supervision of labour makes a
given amount of labour more effective on one farm than on
another. Factors like distance of the farm from the place of
residence or the distance between the parcels of land also
affect labour efficiency.
Agriculture differs from manufacturing industry in that it
offers little possibilities of division of labour as is the case in
industry. The nature of farm enterprise is such as would
demand greater sense of responsibility and willingness from
farm workers. Farm workers are also expected to exhibit a
greater range of technical ability as a single worker may be
expected to do some manual work, some mechanical work
and some supervisory work as well. Skilled farm work,
therefore, is not the same thing as specialised work in industry.
Farmers' technical ability will depend upon his training and
technological development.
Farm worker's efficiency is also affected by his family
background. A worker belonging to a farm family will tend
to be more efficient than the worker coming from a non-farm
family as the former enjoys the benefit of his early experience
and also the experience of his family. The ratio of farm family
workers to hired workers coming from non-farming
background greatly affects the efficiency of labour. Gains or
losses in labour efficiency obviously depend upon whether the
ratio of experienced workers to inexperienced ones is
favourable or not. Besides, age distribution of the farm labour
force also effects the labour efficiency.
Further, farm transport greatly increases the mobility of
farm labour and makes the farm more accessible to market.
224 Agricultural Economics
Crop management is greatly affected by the introduction of
tractor and other mechanical equipment. Introduction of
mechanical operations in livestock and dairying have facilitated
the processes of milking, cooking and sterilising. Technical
improvements have, therefore, greatly influenced labour
efficiency by pervading in all fields of farming.
The changes due to technical improvements occur in two
different forms. Firstly, for the same produce, fewer hands are
required and lower costs may have to be incurred than before.
This directly enhances the output per unit of labour. Secondly,
with the same amount of labour, a greater absolute amount
of output may be realised which also enhances the output per
unit of labour. Mostly mechanical improvements take the shape
of labour-saving devices and may also enhance the volume of
output. To this extent, the double effect of mechanical
improvements raises the labour efficiency Significantly.
Lastly, it may be pointed out that mechanical improvements
alone do not raise labour efficiency. The other supplementary
advances in the productivity of crops and livestock are equally
important in this regard. Improvements in crop productivity
change the ratio of output to employment and hence result in
the increased labour efficiency. The same can be said about
the output of livestock. The modern methods of plant nutrition
and pest control, on the one hand, and the provision of better
feed and breed and also control of animal diseases, on the
other, have increased crop and livestock productivity to the
advantage of the labour force. The efficiency of labour has
accordingly increased.
Agricultural Wages
The farm labour force consists of family farm workers and
hired farm workers. While as family workers have not to be
paid directly, wages have to be paid to hired workers. Under
conditions of static technology in traditional agriculture, farm
wages in the past were determined by the subsistence theory.
This theory provided for the fixation of agricultural wages in
Agricultural Labour 225
such a way as would enable the worker and his family to live
on a minimum subsistence level. Even legislative and
administrative measures provided for the regulation of
agricultural wages on the basis of this theory. This was also
the basis of the Poor Law. At present, even though the norms
of farm wage fixation have changed favourably for the farm
workers, these continue to be less than the wages earned in
the non-farm sector.
Historically, the gap between farm and non-farm wages
have been justified on the ground that a rise in farm wages
results in more than a proportionate rise in non-farm wages.
Even the differences in farm and non-farm enterprises accounts
for the difference in wages.
Adam Smith in his of Nations explained, at length,
the reasons that account for wage disparities between farm
and non-farm workers. Another feature of historical character
is that agriculture draws its hired manpower from the residual
mentioned earlier. Throughout history, it has been a universal
feature of industrial growth to use capital deepening devices
due to which the rate of growth of industrial employment has
always remained far below the rate of growth of population
resulting in the swelling of residual. This residual has willy
nilly, to depend on agriculture for its survival and hence the
wages in agriculture get depressed to the extent the volume
of residual increases.
At the initial stages of industrial growth, the farm sector
is the only supplier of urban workers and industry feels obliged
to draw this labour force out by offering higher wages. This
does not immediately raise the farm wages but as the surplus
manpower is exhausted, the average productivity per farm
worker rises and leads to a rise in wages. This process, however,
does not continue for long because with the expanding
industrial sector, technological developments in industry take
place which, it has been observed, tend to displace labour
from industry. This restricted scope of wage employment in
226 Agricultural Economics
the non-farm sector has always kept the agricultural wages
low.
In the developing countries of Asia, the problem has become
all the more serious owing to the demographic explosion.
With improved sanitation, public hygiene and better nutrition,
the rate of growth of population has tended to be far higher
than the rate of growth of industrial employment. This has,
therefore, lowered the average productivity of labour in farming
resulting in their wages being lower than those prevailing
elsewhere. The popular governments have, however, enacted
legislations providing for fair wages to farm workers. Of their
own, farm workers have poor bargaining power because of
lack of organisation and trade unionism relative to industrial
workers and cannot get justice without state intervention.
State governments have therefore, been enacting legislations
from time to time to save farm labour from exploitation. These
legislations provide for fixing of minimum wages, defining
employment for overtime payments and part payments to be
made in kind. The wages are so fixed as would enable a farm
worker to maintain himself and his family in reasonable comfort
and to promote his efficiency.
State legislations in the developed countries of the world
have improved the status and lot of farm workers considerably.
The employer has to provide for the worker's health, provident
fund, accident and insurance to ensure a better deal to the
farm worker throughout. These have also promoted a uniform
wage structure throughout the country. An encouraging impact
of these legislations has been to make less efficient employers
more efficient to enable them to play better wages to their
workers.
In the developing countries, the governments shall have
to provide for these measures as listed above to improve the
lot of farm workers.
Agricultural Development and
Foreign Trade
I-NPC
Degree of Export Competitiveness:::; NPC
Export Performance
Increasea export of agricultural commodities has been
witnessed over the years. In the last five years, the value of
agricultural exports has increased from Rs. 78,84,29,00
232 Agricultural Economics
2 3 4 5 6
1
5533.65 3343.17 277.00 9153.82
IX Plan Outlays
1997-98
913.65 505.35 12.00 1431.00
BE
804.53 399.93 18.34 1222.80
Expendi ture
1998-99
1348.08 564.19 43.73 1956.00
BE
957.67 372.85 28.37 1358.89
Expendi ture
1999-00
1166.35 735.64 54.01 1956.00
BE
876.91 559.05 35.94 1471.90
Expendi ture
2000-01
1063.76 847.24 54.00 1965.00
BE
583.59 1062.60 19.85 1666.04
Expendi ture
2001-02
1215.40 731.99 37.61 1985.00
BE
801.97 962.74 28.21 1792.92
ExpendI ture
4024.67 3357.17 130.71 7512.55
IX Plan Expendi ture
7236.73 5694.00 264.27 13195.00
X Plan Outlays
Propose d
2002-03
1341.53 760.47 65.00 2167.00
BE
839.58 737.94 79.26 1676.78
Expendi ture
2003-04
1005.72 1149.25 12.03 2167.00
BE
961.41 1065.72 23.64 2050.73
Expendi ture
2004-05
1072.69 1543.81 33.5 2650.00
BE
1676.23 958.53 22.66 2657.42
Expendi ture
2005-06
2785.62 1390.61 3.09 4179.32
BE
2336.21 1460.87 1.61 3798.69
Expendi ture
2006-07
BE 2556.90 2243.10 0.00 4800.00
3253.11 1606.89 0.00 4860.00
Expendi ture*
2007-08
4093.40 1426.6 0.00 40.00 5560.00
BE
3444.49 2443.45 0.00 1040.00 6927.94
RE
3724.19 2038.28 0.00 1286.89 7049.36
Expendi ture*
(1) Rashtriy a
* Provisio nal. # The State Plan Schemes introduc ed from 2007-08 are
ion area in
Krishi Vikas Yojana. (ii) Watersh ed Develop ment in shifting Cultivat
s, Departm ent
North Eastern states. Source' Plan & Policy and Budget Division
of Agricult ure & Coopera tion.
Key Economic Indicators of India OQ
;:t
n
Indicator Unit 2003-04 2004-05 2005-06 2006-07 2007-08 :::
GDP at Factor Cost ff
at Current Prices Rs. Billion 25382 28777 32757 37901*
CJ
(1)
at 1999-2000 prices Rs. Billion 22228 23884 26128 28643* <::J
(1)
Foodgains Production Million Tonnes 213.20 198.4 208.6 217.3 227.3# l:l...
(1)
Inflation Rate
WPI based (1993-94=100) % 5.5 6.5 4.4 5.4 4.7
7.9
CPI-IW based (1982=100) % 3.9 3.8 4.4 6.7 6.2
WPI for Agricultural commodities 182.9 186.7 190.7 204.1 218.1""
N
UJ
WPI for Non-Agricultural commodities 174.0 187.5 196.9 206.8 21.7"" U1
N
Contd.:. CJ.)
0"-
Indicator Ullit 2003-04 2004-05 2005-06 2006-07 2007-08
Foreign Trade
Export US$ billion 63.8 83.5 103.1 126.4 111.0
Import US$ billion 78.2 111.5 149.2 185.7 168.8
Balance US$ billion -14.4 -28.0 -46.1 -59.3 -57.8
Total Agricultural Imports Rs. Crore 21972.7 22811.8 21499.2 29637.9 29777
% to National Imports 6.1 4.6 3.3 3.5 3.1
Total Agricultural Exports Rs. Crore 37266.5 41602.7 49216.0 62411.4 77769.7
% to National Exports 12.7 11.1 10.8 10.9 12.2
Total Long - Term Debt (End March) US$ billion 107.21 115.25 118.56 143.39 159.73 q
Forex Reserves (End March) US$ billion 107.4 135.60 145.1 191.9 281.2$
ExchangeRate (at end of year) Rs/US $ 45.95 44.93 44.27 45.25 40.41 "" CQ
-;
;::;.
*Quick Estimates. # Fourth Advance Estimates. "" Average April -December 2007. "End November 2007. $ Upto E..
February,2008 :;::
....
Source :(i) Central Statistical Organisation. (ii) Directorate of Economics & Statistics, Ministry of Agriculture. (iii) Economic
Survey 2007-08. (iv) Office of the Economic Adviser, Ministry of Commerce & Industry. tT:I
(")
Cl
;::::
-.
Cl
(")
trl
Allied Programmes during
Disaggregated Public Sector Outlays and Expenditure under Agriculture and OQ
;::1.
Ninth Five year Plan (1997-98 to 2001-02), Tenth Plan
(2002-03 to 2006-07) and Eleventh Plan (2007-12)
1998-99 1999-2000 2000-2001 2001-02 2002-03
No.Programme 1997-98
BE AE"" BE BE AE"" t:J
BE AE"" BE M""
BE M"" "'<::l
1 2 3 4 5 6 7 8 9 10 11 12 13 14 "'
C
1845 2569 2175 2785 2503 3402 3146 3361 2597
1. Crop Husbandry 2059 1694 2655
'2.. Horticulture
59 ....
;:,
825 638 932 806 706 885 787 629 1315 544 :::i
3. Soil & Water Conservation 566 561 ;:,..
495 326 525 389 461 425 500 488 506 371 'Tj
4. Animal Husbandry 451 340
145 61 97 85 101 89 87 105 c
5. Dairy Development 141 70 133 65
291 410 323 331 319 346 268 314 269 O"Q'
6. Fisheries 341 284 397 :::i
1966 1695 1741 1740 1920 1458 2032 1520
7. Forestry & Wildlife 1334 1264 1832 2491
168 189 156 118 182 175 147 193 177 211 ;:,
8. . Plantation 206 136
108 29 136 107 170 26 145 191 186 218
9. Food Storage & Warehousing 122 117
819 675 888 810 922 851 1000 %8 1026 939
10. Agriculture, Research & Education575 541
402 303 297 90 108 103 83 57 82
11. Agricultural Financia1lnstitutions 489 154 499
635 660 632 536 689 381 492 184 214 443
12. Cooperation 573 616
122 88 134 50 108 79 155 551 703 297
13. Other Agricultural Programmes 118 153
8687 7698 8796 7365 8281 7577 9097 8248 9978 7655 N
Total Agriculture and 6974 5929 VJ
'-l
Allied Programmes
N
No. Programme 2003-04 2004-05 2005-06 2006-07 2007-08(#) 2008-09(##) Vl
00
'"
Agricultural Development and Foreign Trade 239
Future Strate gy
On the agricu ltural export s front, consis tent and persist ent
efforts to enhan ce agricu ltural produc tivity, proces sing and
preser vation facilities for agri-pr oducts are needed .
Intens ive researc h on post-h arvesti ng gradin g, packag ing
and quality impro vemen t of export ing materi al is require d.
This includ es extend ing necessary assistance on matter s such
as comm unicat ion, packag ing, wareh ousing , transp ortatio n
and speedy custom s clearance. It is also equall y impor tant to
ensure coordi nation with variou s organi sation both within the
countr y and abroad .
Gover nment of India has alread y taken variou s measu res
to boost farm exports. These includ e cash assista nce impor t
replen ishmen t, duty drawb ack, abolition of exercise duty and
impos ition of export duties where necessary. Attent ion has
also been given to strict quality contro l and preshi pment
inspec tion system s.
Thoug h the debate on wheth er Indian farme rs are
respon sive to prices and other incentives is an unsett led one,
we should pursue with the conviction that the agricu ltural
sector is respon sive to incentives and that incenti ves are needed
for export promo tion. The basic questio n howev er is that the
incent ives should reach the produ cers. In view of the
unorga nised nature of the agricu ltural sector, it is to ensure
that the incenti ves such as price suppor t, export subsid ies,
conces sional finance, etc.
Indian Agric ulture and WTO
GATT (Gener al Agree ment on Trade and Tariffs) was
founde d in 1947 with the objective of prescr ibing the rules for
intern ationa l trade. This intern ationa l body had initial ly
23 memb ers includ ing India. Over the years the memb ership
of GATT swelle d and in 1994 it had reache d 118 memb er
countr ies. The overw helmin g majority of this body, roughl y
two-th irds, compr ises of develo ping countr ies. The memb ers
of the GATT accoun t for 93 per cent of world trade at presen t.
240 Agricultural Economics
Several left over countries which are not members of this body
are keen to seek admission in it. Prominent among these
countries is China which is making all out efforts to become
the member of this body.
The headquarters of the GATT is situated in Geneva.
Besides other activities, GATT is akin to an internationals
Court. With the result it is empowered to resolve trade disputes
creeping up among its members.
The detailed rules of the GATT weave around the following
three basic principles:
1. World trade should be carried on non-discriminatory
basis.
2. Domestic industry should only be protected by means
of custom tariffs and not through other commercial
measures.
3. The GATT serves as a framework within which
negotiations can be held to reduce tariff and other
trade barriers.
GATT provided for reduction in tariffs and trade
restrictions in a phased manner over a period of time. The
guiding principle of GATT has been, what is known as the
MFN (most favoured nation) clause. This clause says that,
"any advantage, favour, privilege or immunity granted by a
contracting party to any product originating in or destined for
any country shall be accorded immediately and unconditionally
to the like product originating in or destined for the territories
of all contracting parties". The purpose of this clause was to
encourage multilateralism so that the world trade could expand
in an orderly manner. GATT also provides for action by the
contracting parties for settling disputes that might arise due
to the application of the agreement.
The GATT has proposed multilateral trade regime with
the suggestions that its benefits will be experienced in due
course of time by all member countries. The member countries
Agricultural Development and Foreign Trade 241
Tobacco
FCV tobacco NLS 4 with an yield potential of 2,500 kg/ha
was found for light soils of Andhra Pradesh and Karnataka
and KST 19 Thrupthi (1,500/kg/ha), resistant to black shank,
root-knot nematode and tolerant to drought stress, for light
sorls of Karnataka are suitable for cultivation.
Nine direct interspecific hybrids 4 bridge-cross hybrids
have been produced, while incorporating aphid resistance in
FCV cultivars. Among these, hybrids «Nicotiana numbratica-
mesophial), Nicotiana tabacum), {(Nicotiana benthamiana-
repanda), Nicotiana tabacum), (Nicotiana tabacum, (Nicotiana
gossei-excelsior) and (Nicotiana tabacum, (Nicotiana gossei-
gulutinosa)} were produced for the first time. All F interspecific
hybrids were screened for aphid resistance and 6 showed
resistance. Among 4 bridge-cross hybrids, 2 with Nicotiana
gossei, as a donor parent, have been found resistant to aphids.
Among various crops tested for alternate crops to tobacco
in black cotton soils, growing of hybrid maize during kharif,
followed by chickpea in rabi, showed a benefit: cost ratio of
I: 4.40, followed by tobacco monocropping with a benefit: cost
ratio of I : 1.83.
248 Agricultural Economics
Sunhemp green manuring (kharif) + bidi tobacco (early
rabi) followed by maize during summer gave the highest
gross income.
Maximum net returns of Rs. 64,933/ha in chewing tobacco
were recorded in Bihar with a combination of 25 per cent
nitrogen as mustard-cake + 25 per cent nitrogen as castor-cake
+ 50 per cent nitrogen as urea.
Crop Protectioll. Sequential sprays of Bt kurstaki 1.0 kg/ha
and SINPV 250 larval equivalent (LE) /ha effectively controlled
Spodoptera litura in tobacco nursery and gave a benefit: cost
ratio of 1 : 1.35 in the chemical control practice; adopted by
nursery-growers.
Score 23 per cent EC (Difenoconzole), a systematic triazole
fungicide, is identified as a better chemical than recommended
Bavistin 50 per cent wp for controlling anthracnose in FCV
tobacco nurseries.
Brown-spot damage in the field crop can be effectively
checked by 3 or 4 foliar sprays of systematic fungicides Tilt
and Score at 0.2 per cent or non-systematic fungicides Indofil
M-45 and Foltaf at 0.5 per cent in light soils.
BIMP practices for Helicoverpa armigera which included
HaNPV at 450 LE/ha and management practices to improve
natural enemy activity, through erection of bird perches and
raising 2 rows of Tagetes around Fev tobacco fields, resulted
in only 1.30 per cent damage by Helicoverpa armigera as
compared to 20-30 per cent in farmers' method.
Seed Production
Breeder Seed Production
A total of 2,643.6 tonnes of breeder seed has been prod uced
during the indent of 2,501.6 tonnes. Major quantities belonged
to cereals, oilseeds and pulses.
Isolation distance for castor may be increased upto
300 m for certified seed and the present isolation distance of
Crops for Commercial Purposes 249
300 m for founda tion seed should be increa sed to 600 in
for
mainta ining prope r geneti c purity in castor by modif ied
metho d, which throws only 2-3 per cent monoe cious plants.
Distin guishi ng characteristics of 68 rice varieties pearl millet
hybrid s GHPB 263, 316, 183 and 229) and their parent al lines
cotton varieti es and 2 new sunflo wer hybrid s (PSFH 67, PKV
SH 27) and their parent al lines have been compi led.
Labor atory techni ques have been standa rdised for
identif ication and charac terisat ion of varieties, hybrid s and
their paren tal lines using electr ophor esis profil es
polyac rylami de gel electrophoresis (PAGE) pattern s of soluble
protein s of cotton , rice, sorghu m and soyabe an.
Other disting uishin g varieties were a major proble m in
seed produ ction of soyab ean. The identi fied other
disting uishin g varieti es are true off-types and not a weathe ring
effect. Off-ty pe plants were charac terised by foliage colour,
growth habit, pigme ntation , flower colour, hairine ss, etc.
In rice recom mende d dose of NPK + 25 kg ZnSO /ha as
basal along with 2 foliar sprays of ZnS0 (0.5%) at boot leaf
4
and at panicl e initiati on proved better for enhanc ing pollen
produc tion and pollen viability in restore r parent for good
seed-s etting and seed yield.
In wheat, use of 20 per cent less seed than recom mende d
(80 kg/ha) and norma l dose of fertilizer (120 kg N+60 kg
Pp,s/h a) gave good seed yield and graded seed quanti ty as
well as quality. For seed produc tion in mungb ean and urdbea n,
norma l sowin g in July with norma l spacin g at 30 cm has been
found better.
Polyth ene-lin ed cloth-bag or gunny bag in genera l was
superi or to ordina ry cloth or gunny bag, in mainta ining higher
germin ation and vigour of seed during ambie nt storage . In
soyabe an more than 70 per cent of germin ation could be
mainta ined for up to 25 month s in the polyth ene-lin ed cloth-
bag, as compa red to 14 month s in the ordina ry cloth-bag.
250 Agricultural Economics
Good quality sorghum (cv. M 35-1), sunflower (cv Morden)
and soyabean seeds with high initial germination and vigour
could be retained at a desired level of germination up to 9 in
ambient conditions having moderate RH and temperature.
Hydration of seed with GA3 and simple hydration-
dehydration with or without 'Thiram' dry-dressing, increased
the speed and final field emergence in maize, sunflower,
mustard and onion. These treatments also increased seed yield
than recommended Bavistin 50 per cent wp for controlling
anthracnose in FCV tobacco nurseries.
Rice-bunt incidence in traditional rice-growing areas of
Karnataka, Tamil Nadu, Andhra Pradesh and Orissa, either
absent or were very low compared to very high bunt incidence
in non-traditional rice-growing states Haryana, Punjab,
Himachal Pradesh and Madhya Pradesh.
The seed infection of bacterial leaf-blight in the harvest of
all plots of rice raised from streptocyc1ine' seed treatment was
only 5 per cent compared to 85 per cent in untreated-plot seeds
at Bhubaneshwar. This indicates that seed-borne Xanthomonas
oryzae pv. oryzae can be taken care through 'streptocyc1ine'
seed treatment, Seed-borne nature of the urdbean leaf crinkle
virus was no there is correlation between seed-borne percentage
and secondary spread in fields; as this is influenced by crop
type, varieties and time of sowing. In cauliflower, Alternaria
blight disease reduction and seed yield increase were recorded
in plots sprayed with Contaf (0.05%), followed by Rovral (0.2 %)
and Dithane M-45 (0.:'.%)
Seed recovery percentage decrease and seed rejection
increased in general with increase in sieve aperture size. Hence
aperture sizes recommended are as follows: mungbean - 2.8 mm
round; urdbean 3.2 mm oblong; soyabean - 3.6 mm round;
sunflower - 2.3 mm oblong; safflower - 2.4 mm oblong;
sunflower parental lines CMS 2A an CMS 2B -1.6 mm oblong;
AKR I - 1.4 mm oblong and sunflower hybrid PSFH 67 - 1.4 mm
oblong (at 0.6 kg/min, feed rate and 800 strokes/min). In
Crops for Commercial Purposes 251
soyabean, mechanical Thrashing at 720 rpm showed lowest
germination (65.8%) associated with highest mechanical
Thrashing at 500 rpm k7.9 rpm tip speed) compared well in
germination (81.8% and 80.6%). Toothless concave resulted in
acceptable seed quality at the cost of excessive seed loss in
chaff.
In safflower, harvesting losses and mechanical damage
were observed at 4-5 per cent and 5-9 per cent. Thrashing and
cleaning efficiencies in mungbean favoured cylinder speed of
6.41 m/ sec concave clearance of 10 mm (front) and 7 mm
(rear). Storage indicated that effect of drying methods manifest
in different performances in storage. Sun-drier proved the
worst storer while forced air drier was the best storer.
Trichoderma harzianum isolate PDBCTH 2 an Gliocladium
virens have proved promising in inhibiting mycelial growth
of root-rot fungus Sclerotium rolfsii. Gliocladium virens +
carboxy methyl cellulose formulation has found most effective
against chickpea wilt and root-rot completes. It significantly
improved seedling emergence, plant stand and grain yield of
chickpea when used alone or with Vitavax. Trichoderma
harzianum (PDBCTH 2, Trichoderma koningii, Gliocladium
virens and Gliocladium deliquesens are found effective against
Meloidogyne incognital maximum mortality of 97 per cent
was by Trichoderma koningii.
Entomophilic nematodes Steinernema isolates from
Devanahalli (Karnataka) killed Plutella xylostell and Opisina
arenosella larvae within a day of inoculation and Helicoverpa
armigera, Spodoptera litura and Corcyra cephalonica within
2 days.
The IPM module for cotton crop developed by the NCIPM,
which performed well on farmers' field, was validated on 200
involving 124 cotton-growers. It comprised planting a row of
maize with cowpea as interplants all around the field to enhance
population of friendly insects (predators and parasites),
252 Agricultural Economics
planting of Setaria in between 9 and 10 cotton rows to attract
insect predatory birds, seed treabnent with Imidacloprid at
7 g a.i./kg of cotton-seed, 2 releases of parasitoids
Trichogramma chilonis at 150,000 at egg-laying of Helicoverpa,
and application of HaNPV at 250 LE/ha and 2-3 of home made
NSKE (neem seed-keranel extract) in the basis of ETL.
On the basis of the 15 years data on adult-moth catches
from, adjoining districts of Hyderabad and also rainfaIl-
distribution pattern over these years, a preliminary model has
been formulated to predict Helicoverpa armigera outbreaks.
Deficit monsoon (June to September) and surplus rainfall in
November can lead to an outbreak of the pest.
Apiculture
Mass queen rearing studies in Apis meIlifera showed
significantly higher larval acceptance with a queen cell-cup of
9-mm diameter (77-5%). Acceptance was high (90170 when
cell-cups were primed with royal jelly. Young larvae of less
than 24-hr or up to 36-hr were found better for grafting. These
gave better emergence and quality of queens as judged by
weight of queens which ranged 165-184 mg in 8-9 mm diaqueen-
cups, 138-144 mg in cells prime with royal jelly and 125-138 mg
when 20 larval grafts were implanted in ID-frame queenless
colony highest brood development (increase 450 q 30 cm).
Hence increasing entrance breadth up to 50 per cent over
control is effective in reducing temperature and relative
humidity in summer.
Bee-Ecotypes
Honeybee populations (Apis cerana indica) of high-ranges,
highlands, and mid-lands of Kerala were studied with reference
to morphometric characters. The bees from high-range were
distinct with longer probosics, antennae, wings and legs.
Multivariate analysis of the morphometric data revealed
presence of 4 clusters/ ecotypes in populations; all showing
susceptibility to TSBV (Thai Sacbrood Virus).
253
Crops for Commercial Purposes
Bee Pollin ation
Pattern movem ent of Apis mellifera foragers betwee n male-
fertile (male) MS-234 B and male strile MS 234-A (female) lines
of sunflo wer sown in the ratio of I: 30. It was notice d that 28.32
to 34.56 per cent (mean 31.59%) movem ent of foragers was
from male to male flowers and 30.47 to 37.79 per cent (mean
33.51 %) from female to female flowers, and 16.83 to 18.63 per cent
(mean 17.55%) bee visits were from male to female flowers
and 18.14 to 20.03 per cent mean from 19.00%) from female
to male flower s. The mean inters exual flower visitin g
movem ents varied from 17.55 to 19 per cent which is considered
useful for hybrid seed production.
Apis mellifera was the domin ant forager in Shahi variety
of litcJ:ti, followed by Apis dorsata , Apis cerana indica and
Apis florea. Apis mellifera have been visiting litchi flowers
ranged from 38.60 to 54.89 per cent (mean 46. %), followed by
Apis dorsat a indica from 15.01 to 29.16 per cent (mean 22.56 %)
and Apis florea from 9.68 to 27.11 per cent (mean 15.84%).
Fruit set by 78.66 and 55.12 per cent with open to all pollina tors
and caged withou t bees. In sapota , fruit set was 24.85 per cent
and 28.15 per cent at 20-m and 40-m distanc es from bee-
colonies. Bees activity and fruit setting were lower at 70-m and
lOO-m distan ces. Two-b ee coloni es/ha were requir ed for
optim um pollina tion of Cricke t Ball cultiva r of sapota .
Honey Storage
Effect of storag e temper atures of 3°-4°C room tempe rature,
and 40°C was studie d on unifoloral melliferous honey s of
Brassica campe stris var. toria and Brassica campe stris var.
sarson stored in contai ners of glass transp arent plastic, opaqu e
plastic, tin, stainle ss steel and hindol ium. After 6 month s,
moistu re conten t from origina l 21.6 per cent ranged betwee n
21.7 and 21.8 per cent in toria honey. A decrea se in sucros e
conten t was observ ed from 0.84 per cent to 0.73 - 0.75 per cent
at 4°C.
254 Agricultural Economics
Fiche's test was positive at 40°C only in transp arent plastic,
tin and steel containers. Acidity (at 6 month s) also increa sed
from origina l 0.131 - 0.136 to 0.143 per cent at 40°C in all
contai ners. Colou r, aroma and flavou r (Orga nolep tic
evalua tion) were severa l affected at 40°C in tin contai ner after
3 month s.
They were severe ly affected after 6 month s in tin contai ners
at all tempe ratures and in transp arent-p lastic bottles and steel
contai ners only at 40°C. After 3 month s, a unifor m hard
granul ation with fine crystals was observ ed; this was 100 per
cent at refrige rator tempe rature and 10-20 per cent at room
tempe rature in hindol ium containers. Darke ning of honey was
observ ed in tin contai ners both at room tempe rature and 40°C
and resulte d indete riorati on of flavou r at 40°C after 3 month s.
Honey granul ation in refrigeration was negligible in hindol ium
and opaqu e plastic jars but in others , it varied from 20 to
75 per cent.
Bee Diseases
As yet bacteri al disease s have not been report ed from Apis
mellifera in India. Incidentally, a bacterial diseas e identic al to
Europ ean foulbr ood was detect ed in Sirmo r (Hima chal
Prades h), which caused 30-40 per cent mortal ity of Apis
mellif era coloni es. The bacter ium is highly sensit ive to
oxytertracyc1in.
Bee Predators
For contro lling wasps predat ing on honeyb ees, fish-bait
techni que has been found very effective attract ing as many as
23.75 preda tory wasps /hr. Meat bait prove d second in
effectiveness and attract ed 16.25 wasps /ha.
Rodeu ts
Lesser banico ot rat Bandicota bengal ensis contin ues to
domin ate pest complex in irrigat ed croppi ng system s of Punjab,
Madh ya Prade sh, Gujara t, Andhr a Prades h, Karna taka,
Crops for Commercial Purposes 255
Himachal Pradesh and northeastern hills region, besides
Milardia meltada, Tatera indica and Mus sp. Common house
rat Rattus rattus was reported from chickpea, wheat and
soyabean in Madhya Pradesh. Dryland crops pearl millet,
sorghum, maize and pulses were found predominantly infested
by Milardia meltada and Tatera indica in Andhra Pradesh,
Karnataka and Rajasthan, Short-tailed mole rat, Nesokia indica,
was found in canal irrigated cotton fields in Bikaner (Rajasthan).
This species is a new introduction on arid regions. Earlier, N.
indica was trapped from arid afforestation plantations in
Nagaur district.
Larger bandicoot Bandicota indica nemorivega was
reported from rice fields of Umiam areas in Meghalaya. In
Punjab, sugarcane and rice-wheat rotations predominantly
harboured Bandicota bengalensis, and groundnut, pulses, millet
and cotton recorded predominance of Tatera indica in Punjab.
The house mouse Mus musculus has successfully carved its
niche along with Bandicota bengalensis in orchards, nurseries,
vegetable crop fields and tea plantations in Himachal Pradesh.
In western Rajasthan, gerbils (Meriones hurrianae and
Tatera indica) inflicted more than 50 per cent damage to sole
crops of mungbean and mothbean at the vegetative stage.
Infestation was reduced (38.3%) when they were intercropped
with pearl millet. During rabi, wheat, chickpea and vegetables
suffered 5.0 to 17.5 per cent damage due to rodents. In Chum
and Bikaner (Rajas than), groundnut suffered 30-65 per cent
yield losses to merion gerbils. Damage to wheat was
2.3-8.7 per cent in Madhya Pradesh; 4.0-6.0 per cent in Punjab;
4.4-14.8 per cent in Gujarat Similarly rice suffered estimated
yield losses of 0.7-12.9 per cent in Madhya Pradesh;
4.0-6.0 per cent in Punjab and 4.9-6.5 per cent in Madhya
Pradesh and extent of damage to peas was 5.3-7.8 per cent in
Himachal Pradesh. In pearl millet, rodents caused
3.5-4.2 per cent earhead damage, and sugarcane suffered
4.0- 10 per cent losses in Gujarat. Tomato, cauliflower and
256 Agricultural Economics
cucurbits recorded 5.2-9.7 per cent, 2.7-7.5 per cent and
5.2-18.4 per cent damages.
Burrowing pattern of Bandicota bengalensis in Meghalaya
and Nesokia indica in Rajasthan showed an average of 4-15
openings with 1-6 brood/nesting chambers/bur row. Latter
size of Bandicota bengalensis ranged from 3 to 9 in Meghalaya
and was 6 for N. indica in Rajasthan. Mole-rats in Meghalaya,
hoarded 2.6 kg of foodgrains/ha and it was 1.5-1.7 kg/burrow
in Himachal Pradesh. In Rajasthan hoarding as high as 2.5 kg
of groundnut-kernels was found for the first time in each
burrow of Meriones hurrianae. A germ-cell mutagen, ethyl
methane sulphonate, at 100-150 mg/kg b.w. and
500 mg/kg can cause dose dependent sperm abnormalities in
Bandicota bengalensis and Rattus rattus.
Difethialone, a third generation anticoagulant rodenticide,
caused cent per cent, mortality of test species at 25 ppm in
locally available baits. In field mortality was observed between
3 and 10 days of its consumption and efficacy was at par with
Bromadiolone (0.005%) in loose/waxblock baits.
Cholecalciferol, a vitamin 133-based rodenticide, has also
shown its efficacy against pest rodents at 0.075 per cent
concentration in freshly prepared baits. Zinc phosphide (2%)
bait, followed by Bromadiolone (0.005%) baiting have been
recommended for rodent management in arable crops. In
Gujarat, two applications of Bromadiolone (0.005%) at
10 g per burrow, first at sowing and second at pod formation
stage were recommended for groundnut.
Social engineering activity on rodent control was
undertaken by all cooperating centres for technology
assessment and refinement at farmers, fields. Adapted villages
had a success of over 75 per cent.
Wheat Sonalika and WJ 64 found fairly tolerant to brown
mite Petrobia latens and C 306 and WJ 141 found susceptible.
Amblyseius alstoniae was identified as a potential predator of
wheat-mite. Ethion at 0.05 per cent minimised mite damage,
Crops for Commercial Purposes 257
follow ed by Phosp hamid on (0.03%) and Monoc rotoph os
(0.03%).
Pigeon pea was damag ed by sterilit y mosaic to the extent
of SO per cent in Valsad , 30-S4 per cent in Surat and
10-20 per cent in Bharuc h in Gujarat. Mite vector Acena cajani
popula tion was highes t (6-S/leaf) on lS0-200 days old crop at
the reprod uctive phase. Disease inciden ce was maxim um on
July-so wn crop and mite vector was abund ant in Decem ber-
sown crop. At Bangalore, Maruti record ed maxim um sterility
(29%) incidence, followed by GPS 7 (22%) and GPS 26-C (16%).
Marut i also harbou red a maxim um of 24 mites/ leaf. Sujatha
1-2,5-1-3, GC 11-39, GS 1, GPS 42, BDN 2, GS 1, Marut i though
record ed diseas e inciden ces of 2 per cent, did not favour vector
popula tion build-u p. At Bharuc h (Gujarat), BP 97-2, and BT
20 were free from sterili ty diseas e as again st
30-39 per cent disease recorded in susceptibles BDN 2, BP 97-4
and G 7. At Bangalore, surviv al (4-5/leaf) of Aceria cajani
during off-sea son (Decem ber to April) on weed Atylos ia
scarba eoides was impor tant source for carry-o ver of mite to
succee ding croppi ng on stubble s / ratoon s / volunt ary/pe rennia l
pigeon pea in May-June.
In Gujara t, Sorgh um mite Oligon ychus indicu s which
prefer red lower leaves reache d peak in October. This was
associ ated with the peak of Stehor us paupe rculus . Lines
SR 389, CSH 5, IS 2312, GSH I showe d lower mite infesta tion
compa red to 60 per cent leaHnf estatio n observ ed in CSH I and
GJ 36.
Tetran ychus cinna barinu s infest ed brinja l almos t
throug hout the year at Varana si with a peak of 116 mites per
2.5-cm 2 leaf area during second fortnig ht of March when
tempe rature and relative humid ity were 22°C and 38 per cent.
Preda tory phytos eed mites were abund ant in Novem ber
(35/lea f) at 23°C and RH of 52 per cent. Okra mite attaine d
peak in second for night of Augus t on Pusa Sawan i at Ludhia na.
Peak mite incide nce at Varana si was associa ted with 35°C and
258 Agricultural Economics
39 per cent RH in the first fortnight of May, and predators
Amblyscius longispinosus and Amblyseius multidentatus were
also maximum during this.
At Pusa, a maximum of 51 mites/2.5-cm leaf area was
observed during second week of June when maximum and
minimum temperatures were 41°C and 27°C, and all weather
factors together accounted for 84 per cent variation in mite
population.
Chilli mite Polyphagotarsonemus latus reduced fruit yield
in G 4 chilli by 40 per cent, inflicting a monetary loss Rs 4,950/ha in
Gujarat, and in West Bengal 35 per cent loss was recorded on
Suryamukhi. In West Bengal, this mite also infested jute,
cowpea, balsam, tea, marigold, datura, mungbean and many
weed plants. On chillies, mite recorded peak a, 29°-33°C and
RH of 65-93 per cent. PS 8 was highly susceptible and Sundarai
was fairly tolerant to mite damage.
Large-scale damage to coconut-nuts is by an eriophyid
mite Aceria guerrerronis; causing premature dropping of young
nuts of buttons, and imparting discoloration or scars in the
surface of older nuts. The damage was more in Bangalore and
adjoining areas bordering Tamil Nadu. The mites congregate
beneath tepal, damage soft tissues, that later turn to necrotic
lesions and longitudinal streaks, resulting in splitting and
malformation as nuts grow.
At Varanasi, Ethion (0.05%) controlled brinjal mite, and at
Pusa use of wettable sulphur and Dicofol realised benefit: cost
ratio of I : 5.8 to I : 6.1 in okra. Repeated applications of
synthetic pyrethroids against okra fruit-borer caused
resurgence of mite in Punjab and Ludhiana by eliminating
phytoseid mite predators and these insecticides were also
observed to induce egg-laying in Pusa, at Bangalore, rose-mite
was effectively managed by spraying. Avermectin,
Profenophos, and a combination of Monocrotophos or Dicofol
with pongamia and mahua oils.
Crops for Commercial Purposes 259
Different fractions (powder, oil and oleoresin) of turmeric
and garlic showed effectiveness against Tyrophagous
putrescentiae and Suidasia, nesbitti infesting stored wheat in
Haryana. Aamblyseius longispinosus (a phytoseiid predator)
released at a predator: prey ratio of 1:300 against Tetranychus
urticae infesting rose in polyhouses at Bangalore could bring
down prey population within 15 days compared to release
ratios of 1 : 450 and 1 : 900.
Pesticide Residues
In multilocation trials on rice, basal application of granules
of Phorate (1.2-2.4 kg a.i./ha) and Carboufuran (I kg a.i./ha)
resulted in either no residues or residues below maximum
residue limits in grain and straw at harvest. However, a waiting
period of 60 days is suggested for Lindane on rice to ensure
safety to consumers. On wheat, application of chloropyriphos
as seed treatment (0.9-g a.i./kg seed) and as foliar spray
(400 g ai/ha) at earhead formation stage showed no residues
in grain and straw at harvest, though seed treatment resulted
in low levels of residues in soil.
In sugarcane, HCH application at 2.4 kg ai/ha as soil
drenching resulted in very little HCH isomers in cane and
juice. Application of Mancozeb (1.2-2.4 kg as foliar spray),
Phorate (2.5-5.0 kg/ha as soil application), Quinalphos and
Chlorpyriphos (25, 50 ml each/kg seed) on groundnut resulted
in no residues in kernel, shell and soil at harvest. Application
of Iprodione on mustard at 500 g a.i.jha at 50 per cent pod
formation stage showed no residues in grains at harvest.
On soyabean, a waiting period of 2-3 days was
recommended for Lindane (100, 500 g a.i./ha) and 4-5 days
for Phorate (2,4 kg a.i./ha), following application at flowering.
On okra, safe-waiting period of 4-6 days was recommended
for Lindane (at 0.5, 1 kg a.i./ha), 3-4 days for Chloropyriphos
(250, 500 g a.i./ha) and 1-2 days for Fluvalinate (50,100-g a.i./ha),
applied at fruiting, indues below maximum residues limit
260 Agricultural Economics
were found in cabbage on application of Quinalphos (625 g/ha),
and cypermethrin (125 g\ha ) at head formation stage even
on zero day.
Mancozeb at 1-2 kg a.i./ha and Carbendazim at 0.5-1.0 kg
a.i./ha on chillies required safe-waiting period of 3 days was
recommended for Antrakcol (2-4 kg a.i./ha) and Dichlorvos
(0.5-1.0 kg a.i./ha) at fruit-development stage. However,
Mancozeb (0.75, 1.5 kg a.i./ha) and Propineb (0.875, 1.75 kg
a.i./ha) on tomato at fruiting stage resulted in low residues.
On appale, Dichlorvos (0.5 and 1.0 kg a.i./ha) applied at
fruit-development stage needed a waiting period of
8 days, and Antracol (2.5, 5.0 kg a.i./ha) and Lindane
(0.5, 1.0 kg/ha) showed no residues or below maximum
residues limit values.
Cumulative effect of wrapping + ribbon in farmers' fields
in on maize showed higher yield (2,065 kg/ha), compared to
control (764 kg/ha) Tobacco-leaf decoction (10%) spray on
sorghum at milky stage reduced bird damage at Anand
(Gujarat). In Punjab, sorghum as screen around maize yields
reduced parkeet damage to ripening maize.
The thorn variety passifera of oilpalm found bird resistant.
The farmers were advised to protect crop by traditional
methods like covering with gunny bags or partly with leaf
baskets and dried male inflorescence of oilpalm.
In Punjab bird damage caused to sunflower was assessed
by selecting ten fields at each location. Extent of grain damage
ranged from 0 to 32 per cent of total surface area with an
average dama- of 5.84 q 12.20 per cent. In safflower, peripheral
plants were more prone to bird damage than the inner plants.
Among 14, the most beneficial birds are Cattle Egrets,
Rosy Pastors, Indian Myna, Bank Myna and Black Drango
which controlled Helicoverpa armigera on chickpea by feeding
on its larvae. Two sprays of Endosulfan (0.07%) at pod-
formation stage coupled with bird activity checked pest
population.
Crops for Commercial Purposes 261
The prey-searching efficiency of insectivorous birds was
better in chickpea (var. ICCC 4) grown at 60-cm inter-row
distance compared to 45-cm inter-row distance, in lucerne,
Cattle Egret was most abundant, Feeding on insect-pests,
particularly Helicoverpa armigera (49.4%) followed by Bank
(22.5%), and Indian Myna (8%).
Cutting practices of lucerene removed about 50 per cent
of Helicoverpa larvae and out of remaining, nearly 91.77 per cent
were reduced by predatory birds, following labourers engaged
in cutting, resulting in a total check on pest.
In Rajasthan Cattle Egrets regulated larval population of
saw-fly Athalia proxima on mustard to an extent of 60 per cent
after irrigation, and brought down population much below
economic threshold level. The birds picked profusely sawfly
maggots up to 8-10 has in a day, with a picking success from
48.45 to 65 per cent.
Green bee-eater Merops orientalis gut analysis at Ludhiana
revealed that Hymenopteran insects (almost exclusively honey
bees) constituted 81 per cent of total food content. Other insects
were Odonata (11.62 %), Diptera (2.4 %) , Lepidoptera (1.8 %),
Orthoptera (1.27%) , Coleoptera 1 per cent and others (0.93%)
throughout the year, exception October (31.5 %). These studies
conclude that bee-cater is a pest on honeybees and warrants
suitable control measures.
Whitegrub Management
Quinalphos, Chlorpyriphos, Diazinon at 5 g a.i.Jkg seed
and Imidacloprid at 2.8 g a.i.jkg seed were effective as seed
dresser in groundnut, giving 73 to 93 per cent mortality of first
instar grubs exposed to soil surrounding treated seeds,
10 days after sowing. Quinalphos and Chlorpyriphos persisted
in soil for a longer period giving 73 and 67 per cent mortality
of first-instar grubs 15 days after sowing. Among granular
insecticides, seed furrow application of Isozophos, followed
262 Agricultural Economics
by Fipronil were effective. Presently recommended Phorate
lOG at 2.5 kg a.i./ha yielded 1.913 tonnes/ha.
Fusaiimum moni1iforme, F. chlamydospores, F. oxysporum,
Aspergillus niger, A.chevaIieri Trichoderma viride, Penicillin
sp. and Rhizoctonia bataticola were pathogenic to whitegrub,
Holotrichia consangiomea. Metarhizium anisopIiae, isolate Ma-4
from Durgapura proved highly virulent to Holotrichia
consanguinea causing 100 per cent mortality within 6 days of
incubation at 27°C.
Nematode Management
Root-knot nematode Meloidogyne incongnita and cyst
nematode Heterodera cajani have recorded as major nematode
pests causing appreciable yield losses to mungbean, pigeonpea,
chickpea and cowpea in Bihar, Vttar Pradesh, Maharashtra,
Tamil Nadu and Haryana. Wilt disease incidence in chickpea
was associated with combined infestations of Fusarium
oxysporum F. sp, ciceri and root-knot nematode in Vttar
Pradesh and Madhya Pradesh.
Rice-stem nematode Ditylenchus angustus caused "Vfra"
disease in most deep-water rice-growing areas of Assam. This
nematode was also associated with sheath rot, Saroc1adium
oryzae, leaf blast and neck blast Pyriulia gricea.
ML 3, ML 62, ML 10, and K 851 mungbean and GAV 1
and 82 lb cowpea were found resistant to Meloidogyne
incognita.
Infestation of root-knot nematode and cyst nematode on
mungbean, pigeon pea, chickpea and cow pea could be
successfully minimised by seed treatment with Carbosulforn
(25 SI) at 3 per cent w /w or with Monocrotophos at 0.1 per cent.
In wilt of chickpea, the treatment of Carbosulfone (25 ST)
at 3 per cent w / w + Bavistin at 0.2 per cent was found effective.
Vfra disease of rice can be managed with resistant 'Rayada'-
116-06 treated with Carbosulfone (25 ST) at 3 per cent w /w,
Crops for Commercial Purposes 263
followed by foliar spray of Carbosulfone at 0.2 per cent at
40 and 120 days after sowing. Combination of seed treatment
and foliar application was effective and economical against
rice-stem nematode.
San Jose scale Quadraspidiotus perniociosus at Solan,
Shimla and Kullu was parasitised by Aphytis sp. (proclia
group) and Encarsia perniciosi and predated by Chilocorus
bijugus grubs. Aphelinus mail was active during May-
December and parasitised apple woolly aphid Eriosoma
lanigerum, in spite of its low population this year.
Trichogramma chilonis parasitised 29 per cent of
Helicoverpa armigera eggs on tomato, and larval parasitisation
by Campoletis chlorideae was up to 12.5 per cent at 501an. Peal
leafminer Chromatomyia horticola ,was parasitised by
Diglyphus sp. (Eulophidae) on pea (21.1-58%), broccoli
(0-15.4%) and sweet-pea (0-100%) at Solan. Trials with
Trichogramma pretiosum and HaNPV on tomato fruit-borer
resulted in 50'( egg parasitism by Trichogramma pretiosum
and 30-50 per cent infection by HaNPV at Bangalore.
Apanteles sp. and Bracon sp. have been found parasitising
foliage-feeding Phthorimaea operculella (PTM) larvae. Two
Hymenopteran parasitoids and a coccinellid predater were
recorded on PTM larvae in stored potatoes. Miniature arnies
(20-kg capacity) were constructed to simulate village sorage
for potato and testing bilogical control agents. Bt at potato and
for testing bilogical control agents. Bt at 1.0 g/kg tubers was
most effective in reducing tuber Chelnus blackburni at 50,000
adults/ha and Chelnus blackburni at 50,000 adults/ha were
equally effective in reducing leaf mines by PTM, SINPV at
750 LE/ha (=4.5, 1012 polyhedral bodies/ha) was effective,
causing 87.50 per cent larval mortality of Spodoptera litura
and gave 18.45 tonnes/ha tuber yield at Pune.
Two exotic weevils Neochetina eichorniac and Necohetina
bruchi controlled water hyacinth in Disangmukh area of
Sibsagar (Assam). Floering was also has in the remaining water-
hyacinth areas of Sibsagar.
264 Agricultural Economics
The pyrailid Bactra venosana damaged Cyperus rotundus
severely in pot trials conducted at Bangalore. Larval feeding
caused reduction in plant growth, tuber weight and
regeneration capacity of tubers.
In Himachal Pradesh, Zygogramma biclorata completes
5 generations in a year. In field, maximum adult population
(1.3 beetles/plant) was observed during June end and first
week of September and middle of October. In Punjab, this
beetle is widespread on parthenium in Ripar, Nawanshahr
and Jalandhar.
Cotton
Cotton CNH 154, CNH 108. CNH 1012, CNH 123. RS 213.
RS 2106, HD 328, and HD 368 are identified as resistant to
cotton leaf curl virus. Intra-hirsutum hybrid CINHH 109 is
performing well in Gujarat, Maharashtra and Madhya Pradesh
and CSHH 88 in Punjab, Haryana and Rajasthan. Advance
cultures,viz. ES 12, ES 12 and HS 6 with increased oil content
(22-25%) and tolerance to jassids have showed consistently
good performance Gujarat, Maharashtra and Chhattisgarh and
Madhya Pradesh.
Paired-row planting and liquid-fertilizer through drip
irrigation resulted in higher seed-cotton yield and higher water-
use efficiency; saved 50 per cent of irrigation water. Drought-
tolerant genotypes NA 1589, CPA 423, SUPRA 2, AH 140, TSH
188, G. Cot by 8, G. Cot DH 9 and G. Cot 17 have been
identified on the basis of the physiological and biochemical
attributes. At Coimbatore, photosynthetic rate, nitrate reductase
activity and leaf chlorophyll content of cotton grown in elevated
CO2 atmosphere were higher than control. At Nagpur,
preparation of ridge furrow at the first interculture increased
soil moisture at 0-30 cm and 30-60-cm depth at peak boIl
development stage from 14.91 and 21.73 per cent in control to 16.09
and 22.51 per cent. This recorded significantly higher cotton
yield.
Crops for Commercial Purposes 265
At Khandwa (Madhya Pradesh), Cotton + groundnut
provided maximum seed-cotton yield, and cotton + greengram
(mungbean) and cotton + blackgram (urdbean) were found
profitable in Vidarbha. In Andhra Pradesh, cotton-chillies-
cotton was found better with handsome return of amount.
Plant Protection. Rapid and inexpensive pyrethroid
resistance detection unit has been developed at Nagpur for
detection and determination of resistance frequency in field
strains of Helicoverpa armigera.
Seed treatment with Imidacloprid (70 ws) at 5 g/kg of seed
was effective in controlling sucking pests up to 70 days after
sowing. The IPM module comprising tolerant variety, seed
treatment, release of parasites, balanced fertilizers, using soft-
and-selective insecticides, and hand-picking of eggs, larvae and
damaged fruiting parts proved superior to traditional spray
schedule. Three releases of Chrysopa cornea (10,OOO/ha/week)
and 5 releases of Trichogramma chilonis (250,OOO/ha) between
45 and 110 days were found effective in controlling bollworm.
Sirene, a new formulation of pheromone, effectively checked
the pink bollworm infestation. Cowpea intercropped with
cotton resulted in lesser aphid and leafhopper population and
lesser bollworm incidence than cotton alone.
Maize, Cassia occidentalis, castor, sunhemp and marigold,
when intercropped with cotton or found growing in the fields,
harboured parasitoids/predators of cotton-pests at Anand,
Gujarat.
Biocontrol-based IPM damage. Parasitisation by
Trichogramma chilonis on Helicoverpa armigera eggs was
highest in Punjab. BIPM practices adopted at Hyderabad which
included intercropping with groundnut, excelled included
intercropping with of cotton pests. Incremental cost : benefit in
BIPM was high (10.07) as compared to farmers practice (1.55)
and judicious usage of insecticides (1.59).
Sugarcane
Test entries Co 91011 and Co 91005 gave best perf0rmance
at Anakapalle for cane yield ( 118.7 tonnes/ha and
266 Agricultural Economics
117.8 tonnes/ha) when compared with Tamil Nadu, Andhra
PradeSh and Orissa. In western Vttar Pradesh, Rajasthan,
Punjab and Haryana, CoS 91269 was best at a number of
locations, Co 91010 gave the highest cane yield of plant crop
(1-19.5 tonnes/ha) and ratoon-crop (98.06 tonnes/ha) at
Coimbatore.
Ninety intraspecific hybrids of Saccharum robustum
showed a mean sucrose content of 10.9 per cent, which is
substantially higher than sucrose content of the natural
population of Saccharum robustum. Maximum sucrose content
was 14.07 per cent. Thirteen clones, viz. Co 98001 to Co 98013
have been identified as promising on the basis of yield and
quality. The cane yield and sucrose of these ranged from
95.69 per cent tonnes/ha to 141.75 tonnes/ha and 18.68 per cent
to 21.37 per cent. Co 98004 combined high cane yield of
125.27 tonnes/ha with sucrose percentage of 20.24. New clones
of Saccharum spontaneum and Erianthus from northeastern
region in crosses with hybrid cane varieties gave hybrids with
better vigour and tillering capacity.
The application of 20 tonnes of farmyard manure (FYM)
or cane trash + sulphitation press-mud each at 10 tonnes/ha,
along with recommended dose of NPK sustained productivity
of sugarcane at the higher level than NPK alone at the
recommended dose. The application of 100 and 125 per cent
of recommended dose of N (150 kg/ha) in 2-3 equal splits
increased yield of seed-cane from 71.3 to 73.7 tonnes/ha and
74.0 to 84.4 tonnes/ha, besides improving quality parameter,
in Vttaranchal Vttar Pradesh, Rajasthan, Punjab, Haryana,
and in 4 equal splits proved advantageous in the West Bengal.
Tamil Nadu, Karnataka, 250 k- N/ha (cane yield 72.9 tonnes/ha)
to 450 N/ha (cane \yield 123.3 tonnes/ha). The late shoots/
water shoots are normally harvested along with the millable
canes. Retention of late shoots in crop harvested late (in April
or May) provides additional benefit of cane yield in ratoon-
crop. CoLK 8102 and CoLK 8001 registered 32.3 and
23.2 tonnes/ha higher cane yield when water- shoots/tillers
were retained at the harvest.
Crops for Commercial Purposes 267
Throu gh photoperioic treatments, IND 85-581, IND 84463 ,
IND 84-461 and SES 293 clones were induce d to flower. And
simila rly delay in flower ing was also achieved. The delay in
flower ing based on first tip emerg ence ranged from 13 days
in CoLK 8102 to 22 days in CoH 15 and BO 91. Clones of
treated Sacch arum spona taneum crosse s flower ed during
second and third week of Novem ber, and contro l plants
flower ed in October.
Plant Protec tion. Co 7704, Co 7717, Co 802 1, CO 82 10,
Co 860 10, Co 86011, Co 86250, Co 87267, Co 8842, Co 93009
and Co 93011 sugarc ane varieties were found resista nt red-rot.
Biocontrol agents , Tricho derma sp. and Pseudo monas sp., were
not able to contro l system atic infection of red-ro t infecte d
clump s. Sacch arum robus tum clones IM 76-258 ,
NG 77-159, NG 87-213 and IS 76-137 and erianth us clones IS
76215, IJ 76-470, ERI 2798 and Timor Wild have showe d
multip le pest-resistance.
When the chopp ed bits of sugarc ane having suffici ent
growth of red-ro t fungus were incorp orated in pots, and health y
sets were plante d in red-ro t debris incorp orated soil it was
observ ed that growth of red-ro t fungus was more in the debris
incorp orated soil during early stage of plantin g.
In Punjab , release of Tricho gramm a chilonis at 50,OOO/ha
at 10 days interva l during May-June proved promis ing in
plante d and ratoon crops for controlling Chilo infuscatellus,
and during for Chilo auricilius. Topob racon sp.
(1.72.8%) has been record ed for the first time on Scirpo phaga
except alis larvae in Punjab.
At Coimb atore, Sturm iopsis inferen s peak activit y on
sugarc ane shoot- borer chilo infuscateIIus was notice d during
Januar y (5.6%) and Novem ber (0.1 %) and of Cotesi a flavipes
was seen only in Augus t (0.5%). Granu losis virus (GV) on
shoot- borer larvae was seen throug hout the year at Coimb atore
and the peak was in Augus t. Beauveria brongn iartii showe d
limited ovicid al activity on white- grubs in labora tory. This
fungus dosage equiva lent of 1013 - 1017 spores /ha caused
268 Agricultural Economics
higher levels of mortal ity in the third instar grubs than first
instars in pot experi ments at Coimb atore.
Jute and Allied Fibres
Five strains of jute Corcho rus capsul aris have finer quality
of fibre (1.30 Tex to 1.40 Tex) beside s JRC 321 (1.55 Tex). Two
strains of Corch orus olitorius are found at a par with Chaita li
ORO 878) in terms of fineness (2.97 Tex to 3.05 Tex).
Limin g as well as farmy ard manu re (FYM) with
recom mende d fertilizers produc ed highes t C. capsul aris fibre
yield (1.83 tonnes /ha) when compa red with tonnes /ha of
contro l (N30 P30 9K30) at Nagao n (Assam ). At the same
location, in C. olitorius-rice croppi ng, 50 per cent inorga nic
nitrog en along with 5 tonnes of farmya rd maure (FYM) /ha
increa sed fibre yield (2.49 tonne s/ha) comp ared to
1.64 tonnes /ha in control.
Glirici dia (Gliric idia sepium ) compo st at 5 tonne s/ha
increa sed fibre yield by 25 per cent over NO, P20, K20. And
urea at 20 kg N/ha and Gliricidia compo st at 2.5 tonnes /ha
increa sed fibre yield by 42 per cent. Gliricidia compo st enrich ed
availab le soil N, and its residu al effect on the succee ding crop
was found promis ing.
Plant Protection. In jute, preval ence of root-ro t was up to
30 per cent at Katiha r (Bihar) and stem-r ot and collar- rot up
to 257( at Cooch bihar (West Bengal). Inhibit ion of radial growth
of Macro phomi na phaseo lina by Tricho derma harzia num
(61 %). Tricho derma viride (59%) and Gliocl adium virens (44%)
was observ ed in in vitro.
Farming in
Coo per ativ e Sector
Sources of variation df ss MS F
Replications within location p(r - 1) RSS RMS
Location p-1 LSS L MS
Treatme nt t-1 TSS T MS TMS/LT MS
Location x Treatment (p - 1) (t - 1) LT SS LT SS LT MS/E MS
Pooled error p(r - l)(t - 1) ESS EMS
Sources of variation df MS F
Total pt - 1
Farming in Cooperative Sector 273
= (_r_
EMS
) i
= weigh t for ith locatio n
L.
I
= total for it/I location
t - numbe r of treatm ents
W=I.w ,
Locati on SS = t (Ln-C F
(k-4)
(p-l). (t-l). ( )
k+t-3
where , p == numbe r of locations or numbe r of experi ments
combi ned.
If the interac tion is proved to be presen t, the significance
of the averag e effects of treatm ents is tested by the F-test
where
F: Treatment MS
Interaction MS
The standa rd error for the compa rison of treatm ent effects
is given by
CD=t .SE(d )
where , t == table value of t for interac tion df The treatm ent
means are compu ted as
- 1
W4.. I I
Variety Replication
11 JIl IV
Year: 1983-84
Variety Replication
11 111 TV
Year: 1984-85
VariehJ Replicahon
11 JIl IV
Year
Treatmellt LW;Y.
YI Y, Y,
Rep. r, 4 4 4
Similarly, = 5553.9700
'L = 12253.7200
For treatment 1,
rw,y, = W1Y1+W2 Y2 +W3Y3
= (1.149921) (13.49) + (0.108454) (44.00) + (0.164609)
(45.40)
= 27.757659
Similarly, for other treatments we get, 'L w,y; values.
GT = L(L = 179.948041
Year SS =!rw.
t
(ry-)2 -CF
I I
= Ys{25410.5131)-CF
= 530.9204
278 Agricultural Economics
1E8
=79.262
=(3-1)(5-1) (12-4)
(12+5-3)
=4.6
Weighted a1lalysis of varia1lce for the data i1l Table
Sources of variation df SS MS F
Total 14 1154.4854
279
Farming in Cooperative Sector
The table value of X has to be obtain ed by interpo lation.
2
SE(d)
2(20.8064)
=
1.422984
= ../29.24333653
=5.4077
CD = t.SE(d )
= (2.306)(5.4077) = 12.470
Total rpab - 1
In the first stage, the data from individ ual experi ments are
analys ed. The homog eneity of both error (a) and error (b) are
then tested. If the homog eneity of error (a) and error (b) are
establ ished, the combi ned analys is is carried out. When
hetero genei ty is presen t either in error (a) or error
(b) or both the combi ned analys is is carried out.
Split-p lot Exper iment Comb ined Analys is when Error
(a) and Error (b) are homog eneous
The requir ed sums of square s are as follows:
Replic ations within locations SS = Sum of the replica tion
sum of square s of individ ual experi ments = IRSS
Farming in Cooperative Sector 281
Total rpyt - 1
F= TMS
YTMS
If we are interested in testing the consistency of the
treatments averaged over the locations and years the test
statistic is
F= TMS
EMS
The above F-tests are appropriate only when the error
mean squares and interaction mean squares of individual
experiments are homogeneous. When these mean squares are
heterogeneous, the analysis becomes more complicated. If the
error mean squares are heterogeneous, the location x year x
treatment interaction, may be tested by a weighted analysis
of the means for each location and year, using weights as in
the case in single series of experiments. When both location
x treatment, and year x treatment interactions, are present the
consistency of treatment responses may be tested using the
criterion,
F= T MS+PYT MS
PTMS+YTMS
with