The Indian Journal of Agricu Tural Economics

THE INDIAN JOURNAL OF AGRICU TURAL ECONOMICS

(Organ of the Indian Society of Agricultural Economics)

Vol. VII. MARCH 1952 No.

CONFERENCE NUMBER

)e/PROCEE DINGS of the TWELFTH CONFERENCE held at Gwalior, November 1951 _‘

SUBJECTS

1. Problems in Calculating Cost of Cultivation.

2. Objects and Methods of Crop Planning.

3. India's Foreign Trade in Agricultural Commodities.

Rs. 6-8 CONTENTS.

PAGE Welcome Address—Sum K. B. LALL, I.C.S. — •. • • .• • • 1 Inaugural Address—Hon'ble SHRI TAKHTMAL JAIN .. • • • • • • 4 Presidential Address—SHRI R. K. PATIL • • • • • • •. • • 7

Problems of Calculating the cost of Cultivation

(1) T. G. SHIRNAME • • • • • • • • • • •. .• • • 23 (2) V. G. PANSE .. •. • • • • • • • • • • .• • • 36 (3) J. K. PANDE .. • • .• • • • • .• • • • • • • 41 (4) P. N. DRIVER. . • • .• • • • • • • •. 55 (5) K. M. SHAH .. •. • • • • • • • • • • • • • • 63 (6) G. D. AGRAWAL •. •. .• • • • • • • • • • • 73 (7) ARJAN SINGH .. •. • • • • • • .• •. •. 79 (8) Y. SANKARASITBRAMANIAM •. .• • • • • .• • • • • 87 (9) S. G. MADMAN • • • • •. •. • • • • • • • • 94

The Objects and Methods of Crop Planning

(1) TARLOK SINGH • • • • •. • • • • • • 100 (2) R. L. SETHI .. • • •. •. •. • • • • •. • • 105 (3) K. G. SIVASAVAMY •. • • • • • • • • • • • • •. 112 (4) J. S. GULERI .. • • • • • • • • • • • • • • • • 126 (5) M. B. DESAI .. • • •. • • • • •. • • • • 132 (6) M. SRINIVASAN • • • • • • .• • • .• • • • • 140

India's Foreign Trade in Agricultural Commodities

(I) R. N. PAD VAL •. • • • • • • • • •. • • • • 142 (2) C. W. B. ZA CHARIAS • • • • • • • • •. • • • • 149 (3) M. A. KULTALINGAM PILL AI • • • • • • • • • • 154 (4) C. IL SHAH . • • • • .• • • • • • • • • • • 167

Appendices PREFACE

GB This issue of the Journal is a record of the proceedings of the Twelfth 1 Annual Conference of the Society held in November 1951, at Gwalior, 4 Madhya Bharat. In addition to the delegates from the Universities, the 7 Central and State Governments sent their representatives to the Con- ference. The papers read at the Conference were of a high quality and the presence in the gathering of educationists, research students and Persons who had a live contact with the problems of our agricultural eco- 23 nomy, either as administrators or policy makers, contributed much to the 36 level of discussions. 41 55 I had observed in my preface to the Lucknow Conference Number 63 (1950) that the reason for the growing interest in our Annual Conference 73 is mainly the selection of subjects for discussion, which have not merely 79 theoretical and academic value but also have a practical bearing on some 87 of the vital problems that affect our present agricultural economy. Our 94 Papers are usually based on field ,studies. The subjects discussed viz. "Calculation of Costs of Cultivation", "Crop Planning" and "Foreign Trade in Agricultural Commodities" have all an immediate relevance in their practical application to any plan of integrated agricutural develop- 100 ment in the country. 105 112 We are endeavouring to prepare a comprehensive note on the pro- 126 blem of calculating cost of cultivation in Agriculture based on the Papers 132 submitted at the Conference and the discussion which followed. This 140 note is expected to be ready within a month and we shall circulate the same to members.

We wish to take this opportunity of thanking the Government of 142 Madhya Bharat, who acted as the hosts of the Conference and who by 149 their excellant arrangements made it a complete ,success. We must parti- 151 cularly express our grateful thanks to H. H. the Maharaja of Gwalior, 167 the Raj Pramukh, Shri Takhtamal Jain, the Chief Minister of Madhya Bharat, Shri K. B. Lall, the Chief Secretary of the State, Dr. L. C. Jain, the Economic Adviser and Development Commissioner, Madhya Bharat, and the members of the Reception Committee for their generous hospitality.

MANILAL B. NANAVATI President. Bombay, 15th February 1952. THE CROP PATTERN IN A PLANNED ECONOMY by Tarlok Singh, tI.C.S. Dy. Secretary, Planning Commission, New Delhi. It is frequently stated that if agricultural targets are to be achieved, there must be both an integrated system for prices and a system of production controls. The object of this paper is to examine the second of these assumptions and to consider the process whereby, under a scheme of agricultural planning, the crop pattern could be determined and given effect to. There is no single set of conditions which may be described as 'planned economy'. There is instead a continuous process in which an increasing proportion of the economy comes under social control. Correspond- ing to the balance which may exist at any stage, the appropriate ideas or instruments of social control have to be devised and employed. Crop planning is one such idea and, lest the idea and the reality to which it has to fit diverge too far apart, it is useful to set it in some kind of perspective. The use of an expression like 'targets' in agriculture is apt to be mis- leading. Where the conditions of production are entirely under human control, it is legitimate to speak of firm targets. Natural factors play a dominant part in determining agricultural output and under the best of conditions agricultural targets can seldom be much more than estimates of production. These estimates are reliable in the measure in which they are derived from scientific statistical assessment based on data collected by-trained personnel and conforming to the conditions of the inquiry. If, over as short a period as a single season, the estimates of production are liable to be revised more than once, it follows that estimates suggested several years in advance are open to a very large measure of variation. This would be so even if the estimates were aggregates based on definite programmes drawn up for individual farms or villages. When they are proposed on the strength of calculations made for large territories on the basis of additional production consequent upon investment in new development projects, they are no more than very broad and general indica- tions of the objectives to be realised. Such estimates also suffer from the defect that while additional investment is supposed to yield a defined amount of additional production, a certain basic level of production is assumed as being more or less constant. Time and again, this assump- tion has appeared to be doubtful and, therefore, it is necessary to think of agricultural production goals in terms of total rather than additional production. The fact that production targets which may be proposed for any State or for the country as a whole are at present subject to so many variables and uncertainties suggests that agricultural planning in India is still in its very rudimentary stages. The conditions which govern the present stage of planning are, briefly, that— (i) sufficient knowledge does not exist of the crop plans which would be appropriate to different types of conditions in each disposal qi region; nor, indeed, is there at present an agency at the Si of the State which can organise, in collaboration with the best farmers, the existing knowledge and experience; THE CROP PATTERN IN A PLANNED ECONOMY 101

(ii) at the village level there is no organisation yet in touch with every farmer and responsible in some manner for developing production. It is only through such an organisation that sug- gestions and assistance can be transmitted to the entire agricultural community; (iii) the economy of the basic farm unit is largely determined by considerations of subsistence. Its small size and inadequate !(21, resources limit the possibility of altering the existing crop pat- Lc- tern; and se ri- (iv) the positive financial and technical assistance which the State !ct and the co-operative movement at present provide does not touch Ln- more than a fringe of the problem, so that the means available for implementing any agreed crop pattern are quite inadequate. L(1- It is important that before formulating any proposals for crop planning or these limitations are recognised. op The experience of Germany under the Four Year Plan during the Las count- 7e. phase of preparation for war and of Great Britain and several other ries during wartime offers useful illustrations of the extent to which is- agricultural production might be directed and controlled. It appears that an apart from programmes for raising agricultural production generally, crop • a planning as such has been limited to expansion of area and production in of one direction at the expense of area and production in another. In Great ;es Britain, it was a case of foodcrops against grass, in India of foodcrops ey against cotton. There are examples also of production controls being ed Operated in order to reduce a surplus. There does not appear to have If, been any instance of a comprehensive scheme of crop planning being im- tre posed on farmers in any country even under the stress of war. In the ed controlled economy of Germany, no less than in other countries, the main )n. incentive to increase agricultural production has been through gua- ite ranteed prices and greater profitability of particular lines of production. tre The limits of crop planning have thus been implicitly recognised. ,he ie- The approach to proposals for crop planning in India has to be considered in relation to the overall results which are desired. The following features distinguish the present agricultural situation in India:— Led (1.) Increase in production is required, not in any one direction at the is expense of another, but in all directions; ip- level of production being low, there is a considerable nk (2) The present within which, through larger capital investment and a al margin better standard of agriculture, increase in production can be secured in all directions; ate , (3) Under existing conditions, competition from foreign supplies is ies not a factor to be reckoned with; at the same time, it is possible to supplement internal production by imports; and ?,nt (4) The agricultural plan is conceived, not against a short-term emergency, but against the background of long-term development. ich Mainly because of the price factor the individual producer has fre- Leh between- alternative crops. When there is con- sal quently to face a choice increasing agricultural production simultaneously in est siderable scope for a number of directions, because of the present low level of production, 102 THE INDIAN JOURNAL OF AGRICULTURAL ECONOMICS from the long-term interest of the economy, there need be no intrinsic conflict between increase in production in different directions. It may be that if, as a basis of development, emphasis is placed on one line of production at the expense of another on purely general grounds, the entire pattern of production may be upset. A situation can occur in which national security or urgent national interests may demand a clear choice between, say, foodgrains and other crops. In that event, the problem has a short-term, emergent character and, as it is not related to the needs of long-term development, the necessary shift can be organised. From the aspect of development of the economy as a whole, that crop pattern may be considered the most suitable which strikes the best balance between the following criteria:— (i) From the point of view of the maintenance and improvement of the fertility of the soil, the selected crop pattern should repre- sent the best possible use to which the land can be put; (ii) The selected crop pattern should, over a period, make a larger contribution to the national income than any alternative scheme; and (iii) Within the limits set by the first and the second criteria, the selected crop pattern should make the highest contribution to- wards the quality of nutrition derived by the community.

These are generally valid criteria which can be sustained as a basis of 11( policy, although at times they may conflict with one another or may be ez found difficult to apply. The problem, therefore, is not whether there hz should be increase in the area under foodgrains compared to the area under commercial crops, but rather what means should be adopted for working to out in practice crop patterns for various regions in the country which ful- Cc fil the conditions suggested above. In this sense, the role of an integrated price -system may be considered to be negative. The system of prices ci, should not provide undue stimulus for shifting resources in one direction cc or in another; it should instead leave the crop pattern to be determined tic for each region and indeed each farm according to the best assessment ci possible of its natural and economic advantages and the long-term inter- fo est of the community. fa In any region the crop pattern which may be considered to be most pr suitable will at best be a general guide rather than a set of close and rigid lo: regulations. It is not merely that at present the necessary machinery ciz for enforcing a crop plan is not available. Much more important is the consideration that the day-to-day operations of farming call for a great ec deal of adjustment and initiative on the part of the farmer. No set of of directions can meet the varied situations which farmers on the land have of to meet. Anything like a crop plan, which affects the farmer's ability op to adopt what is locally regarded as the best course, is likely to injure rather than assist production. to tic If the allocation of resources, including land and capital, is to be de- bu termined by considerations such as those described here, then the primary co question is not what physical controls over production are necessary, but as rather what are the methods available for influencing the crop pattern in the desired directions. The first step in each region and in each village has to be a general survey of local conditions, including current rotations, eh fallow lands, farm equipment, etc. The survey would indicate the scope in4 for extensions of cultivation, possible changes from current practice in the Cu THE CROP PATTERN IN A PLANNED ECONOMY 103

rotation of crops, local works designed to improve the land and so on. >ic agricultural offi- be Such a survey can be carried out with the assistance of farmers organised in village production 70- cials by groups of experienced is enbrmous re councils or associations serving blocks of villages. There scope for tapping local knowledge and experience and mobilising the best La- of a ce farmers of an area. On the basis of such *a survey the framework plan for each local area could be worked out. Within this famework, the to it could deter- he Village ,production council and each farmer belonging mine the most suitable combination of crops as well as other practical measures to be taken by the people on their own and with help from the 'opop government agencies. Provided price incentives do not distort farmers' ice Preferences, it may be expected that the crop pattern which a village councils accepts will be such as will secure the cooperation of the farmers. of This is the basic condition of success, for, it has to be recognised that de- re- cisions relating to the selection of crops which are to be grown have to be taken and carried out locally. Whatever the organisation of agriculture, ger Whether it is ultimately based on collective or co-operative or individual ne; units, it is doubtful if a rigid and complete scheme of crop planning can ever be imposed from above. There would undoubtedly be need for the general directions and guidance in terms of regional crop patterns, but to these do not affect the farmer's freedom to make adjustments. To achieve the desired crop pattern, what is required is not so much of negative regulation or restriction as positive measures of development in be each separate farm unit. The fact that at present production is in the ere hands of large numbers of low-income farmers, many of whom do not der have the capacity to repay loans advanced to them, sets a severe limit ing to the developmental programmes which can be adopted. It is in this ful- context that the immediate programme recommended by the Planning Lted Commission has a significance which has perhaps not been fully appre- ices ciated. This programme includes (1) formation of village production ;ion councils, (2) registration of the larger individual farms, and (3) promo- ned tion of co-operative farming societies in which groups of small farmers Lent closely connected with one another come together to form fair-sized units ter- for management and cultivation. It is plain that unless the size of the farm unit is substantially increased it is difficult to work out a suitable development for it. Without a great deal of medium and lost Programme of on relatively easy terms, it is not possible to raise appre- igid long-term credit ciably and rapidly the general level of agricultural productivity. The Lery ability of a farm to repay loans over a period turns very largely on the the management. Thus, larger farms and a programme mat economics of size and of development for every farm are central as much to the development t of of the specific idea of crop planning. Even short of co-. Lave agriculture as to operative village management, a great deal can be achieved. The poten- ility expands greatly if the entire area of a village comes jure tial for development to be co-operatively managed, for, such a step means not only a propor- tionately greater repaying capacity but also, on account of better distri- de- bution of income in the village and increased funds in the hands of the as well lary community, larger investment in the land from internal sources but as an improved credit base for medium and long-term finance. n in In addition to credit which may be provided through co-operative lage now assuming increasing responsibility for provid- .ons, channels, the State is ing finance, technical assistance as well as supplies for increasing agri- 20pe- Provided assistance is given in the main with re- the cultural production. 104 THE INDIAN JOURNAL OF AGRICULTURAL ECONOMICS

ference to programmes drawn up by village production councils, even the present limited means at the disposal of the State can go a long way to influence the crop pattern in directions which are considered most bene- ficial to the economy. In such a situation, subsidies for certain selected .items of work could also be effectively employed. From many aspects control over marketing of agricultural products has a strategic importance. It is essential for enforcing a system of integrated prices. It could be of material value in providing short-term credit. Through it the type of seed employed, the growing of agricultural commodities and the area which should go under particular crops fe could be influenced. While it is outside the scope of this paper to consider how a system of integrated prices is to be enforced, it is important to 1$ emphasise that such a system cannot be effective without adequate market controls. How far these controls should go is a matter primarily for prac- 2: tical experience. It may be sufficient under certain conditions to estab- Y( lish controlled markets in which commodities are purchased by licensed It dealers at prices determined by the Government and supplied in quanti- qi ties indicated by the Government to licensed processors and distributors. as. Or, it may be necessary to establish a system of monopoly buying for a la number of the major non-perishable agricultural commodities so as to bring under some kind of unified control all trade operations up to the ac gtage of processing and wholesale distribution. Powers of requisitioning cr stocks will also be necessary. 1/ In Whatever the system adopted, without control over marketing operations it is difficult to ensure that changes in relative prices will not so dis- to tort the crop pattern as to nullify other efforts. While this is an essential condition, in the main, the crop pattern has to be influenced by positive se measures of guidance and assistance associated with development programmes, rather than through restrictions of a negative character or any on rigid system of physical control over agricultural production. Such ne restrictions or controls are essentially devices for an emergency, not in- to struments for raising the level of agriculture or for achieving specific pro- th duction goals. As planning develops, the ability to influence the crop fa pattern increases, but crop planning and regulation will continue to be a ga device of limited value, suited at best to emergent situation and outside the normal scope of controls inherent to planned economic development. de Production targets which may be proposed at this stage of agricultural oil planning are in the nature of a first step in the evolution of a systeni in Sr which the agencies which formulate production and efficiency goals are at no less responsible for fulfilling them. The essence of agricultural plann- in ing is not the adherence or maintenance of what are at best uncertain and di( tentative estimates of production, but the building up of the structure in which the various constituent agencies from the village upwards can act together as part of a single integrated system, each able to take decisions co' within its own sphere and move in harmony with the others. In lin is INT an tut wl in