Food Grain Production Policies in India

In this article we will discuss about the food grain production policies implemented by the government during the planning period in India. 

In the face of rising population to be fed and the stagnant agriculture during the sixties, the management of food economy came to be accepted as an essential goal of the state policy in India, Before the mid-nineteen sixties the activates of the government in the food grain economy were limited in scope to the import of grain and its distribution mainly in the urban areas under various forms of rationing during periods of food scarcity following poor harvests.

Thereafter, however with adoption and promotion of the ‘new agricultural strategy’ the government began to play an important role in the transfor­mation of the farm sector.

This led to the involvement of the state in diverse activities such as the development of infrastructural facilities, provision of subsides of different kinds, supply of inputs and credit, and the promotion of agromic research for the adoption of exotic crop varieties to Indian conditions.

Food policy of the government during the planning period has three aspects:

(1) Measures to raise output of food grains have been undertaken,

(2) Measures to improve the distribution system of food grain have been introduced, and

(3) Large scale import of food grains have been resorted to in a bit to tide over short period scarcities.

Food grains are the main consumption item of Indian people. Accordingly, the government has tried to increase their supply. Production of food grains, in particular, and agricultural production in general has been sought to be raised through the adoption of a package of measures designed to promote rapid growth in a few regions endowed well with irrigation facilities and to encourage private investment in the necessary means (modern inputs, tube wells, farm machinery etc.) for the cultivation of the new varieties.

Package of measures can be conveniently divided into:

(i) Technological Improvement:

Though the government accepted the importance of technocratic measures in increasing food production right from the beginning of the, planning period, yet serious attempts in this direction were made only after 1966 with the adoption of the New Agricultural Strategy.

Before the mid-nineteen sixties the activities of the government in the food grain economy were limited in scope to the import of grain and its distribution mainly in the urban areas under various forms of rationing during periods of food scarcity following poor harvests.

Thereafter, however, with adoption of the new agricultural strategy based on the cultivation of high yielding varieties of seed with use of ‘modern inputs’ fertilisers pesticides etc. in areas of assured water supply, the government began to play major role in the transformation of agricultural sector.

This led to the involvement of the state in diverse activities such as the development of infrastructural facilities, provision of subsides of different kind, supply of input and credit and the promotion of agricultural research for the adaptation of exotic crop varieties to Indian agriculture.

(ii) Fertiliser Policy:

The success of hybrid and high yielding varieties of seeds depended on a considerable inputs of fertilisers and water. There are three ways of propagating the use of fertilisers. One is through extension and demonstration, another through an improved delivery system and thirdly, making it worthwhile for the farmers to use fertilisers by providing subsidy.

The issue regarding the delivery system assumed importance in India because of the stupendous task of reaching millions of operational holdings, to import fertilisers allotted to India the government established a Central fertiliser pool (CFP) in the Ministry of food and Agriculture.

On the recommendation of the committee on fertilisers (1975), the government of India decided to discontinue procurement of domestic production for centralized distribution and allowed fertiliser factories to market their produce through the agency of their choice.

In 1980-91 government took a major decision to make fertilisers available at a fixed price to all blocks in the country including those without rail roads. Reduction of the fertiliser price by 1/2 percent in 1983-84 led to increased consumption of fertilisers and record production of 140 million tonnes of food-grains.

(iii) Irrigation Policy:

In earlier years higher priority had to be given to Projects but later the importance of minor irrigation was recognized. The heavy emphasis on major and medium-scale irrigation gave way to minor irrigation. In the second Plan, only a small percent of agriculturally related outlays were allocated to minor irrigation.

By 1966-69 this increased to 19 percent. Attention was paid to tube wells, dug well and pump sets. Electricity rates for agricultural purpose are heavily subsidized, The HYV period witnessed a snap step-up investment in inputs and irrigation.

Technological changes, in general and mechanisation in particular, have been taking place mainly among the large farms, in high income and high growth pockets. The demand for tractors is increasing at a faster rate than its supply. Tractors are most important in the preparation of seed beds and in land leveling for better irrigation. The government encouraged the production of tractors. It has reduced excise duty on tractors and liberalized credit.

In the field of pesticides and insecticides the policy was that while these would be manufactured by the private/public sector the central agency, viz., the Plant Protection and guarantee Organization would provide supervision to maintain their standards.

A question to consider is which particular technological aspect re­ceived more importance than others, from the policy point of view. Seeds were undoubtedly, the focus of the technological strategy, the fertilizer and water came to be associated as inevitable constraints.

(iv) Land Reform:

It was recognized long back that land reforms are an essential condi­tion for promoting agricultural development. Therefore, the government introduced measures to abolish intermediary rights on land and all state government adopted legislation for the purpose.

Ceiling on holding were prescribed rents regulated and Right of ownership conferred on the tenants. These reforms did help in effecting changes in land relationships but be­cause of loopholes in legislations there forms were implemented half-heartedly.

(v) Support Prices:

How far changes in food grain prices help in effecting changes in the food grain production pattern and supply is still far from near.

As regards the role of agricultural prices in accelerating agriculturist production, it may be recollected that the growth of agricultural output can come about through (i) increase in area under crops (ii) increase in the productivity of individual crops, (iii) changes in cropping pattern from low value to high value crops.

Since prices play a crucial role in determining the allocation of resources and also in capital formation, price policy can effect all the three factors through which increased agricultural production can be brought about.

Agricultural prices can also affect the levels of output in other sectors due to forward and backward linkages. In order to deal comprehensively with this subject the Agricultural Prices Commission (APC) was established in 1965 to make recommendations to the Government regarding the prices at which procurement should be made.

The terms of reference of the APC included, inter alia, the following:

(i) The need to provide incentive to producers for adopting improved technology and for maximising production,

(ii) The need to ensure rational utilization of land and other productive resources

(iii) The likely effect of the price policy on the rest of the economy.

Wide ranging as these terms of reference were, they haven’t been modified and expanded in 1980 in response to the changes in agrarian economy that have taken place during the late sixties and the seventies.

An important addition is the directive that price fixation should “take into account the changes in the terms of trade between agricultural and non-agricultural sector” the original terms of reference did not cover any principle of pricing in relation to costs or parity between sectors, barring a reference to marketing costs and margins.

Agricultural input costs in relation to output prices and more generally with parties of different kinds, have been given further and explicit recognition in 1985 with the commission being renamed as the Commission for Agricultural Costs and Prices (ACP).

Given large output fluctuations arising out of the vagaries of the monsoon and given the low price elasticity of demand for food grains in the country, prices tend to fluctuate a lot from year to year as changes in the supply induce disproportionately large changes in the market price.

Support, price may be regarded as an offer price at which the government is willing to buy any amount of grain from the farmers in years of good harvest when in the absence of a support operation, the market price may fall below the cost of production, it has therefore to be above the hypothetical market price and for that reason has a built in element of subsidy to the producer.

The rationable for ‘minimum’ support price lies in two factors:

(i)Protecting farm incomes in years of abundance through purchases by the government at minimum prices implies building up of stocks and

(ii) Maximum price would imply protection of consumer interests years of crop failure since the food price acts as a base in the determination of both agricultural and industrial costs.

Thus the logic of support price leads to the notion of a price range, especially in relation to the objective of dampening price and income fluctuations arising out of unpredictable monsoons.

In contrast to the support price it is not easy to settle what constitutes an incentive price. The rationale of a price incentive lies in the promotion of growth. A support price, covering costs and some profit during a period of rapid growth in production is in effect an incentive price. It must also be noted that incentives need not cover output prices alone but may be extended to include subsides in the supply of input and credit.

A perusal of the Government’s policy in this regard brings out two distinct features. In the earlier phase the minimum support prices have been used as an active instrument. During more recent years support price have been used as an active instrument of food policy. This change explained by two factors.

First a sharp increase in the production of food grains made it almost imperative that farmers be protected from various of market conditions where a large crop usually spells disaster for the producers.

Secondly in the wake of new technology that has been adopted in agriculture, the cost of inputs has materially gone up. To keep the production of food grains profitable the government has been practising actively the use of the instrument of support prices since 1977-78 the support prices have been raised from year to year.

(vi) Distribution of Food Grains:

The distribution of food grains emerges as the most significant aspects of food policy in the country.

The various measures that have been adopted by the government to bring about an equitable distribution of food grains are given below:

(a) Public Distribution System:

The main function of the PDS through or wide network fair price shops is to protect the interest of the vulnerable sections of population against high prices.

(b) Buffer Stocks:

The primary objective of the buffer stock is price stabilization. The objective as Khusro puts it, “can be to eliminate unduly low-price through the post-harvest period specially in a good year and to climate the unduly price peaks of the off season especially in the bad year.” Another related objective of the buffer stocks may be to achieve stability of farm income.

(c) Procurement:

The system of procurement was in vogue at the beginning of the First Plan to support the statutory rationing system. The quantum of procurement is directly linked with the commitments of the public distribution system. Procurement activity got intensified after-mid-sixties.

(d) State Trading in Food grain:

State trading in food grains has assumed two forms. First, open market purchases of food grains by Government agencies and secondly, the government undertook monopoly wholesale trading in 1973, but had to abandon on later on as it could not be implemented successfully.

(e) Agro-Processing Sub-System:

In India, the history of the modernisation of the processing sub-system can be traced to the selling up of cotton ginning pressing factories and rice hullers. The transition from rice hullers to nee-shellers to modern rice mills following the new strategies of HYV programme is an important development in the agricultural sub-system in India.

In spite of the spectacular progress made in wheat production by the adoption of HYV in 1966, no perceptible impact was made on the when processing industry due to the policy of restriction on the movement of food grains. The edible and non-edible oil industry occupies an important place in the agricultural processing sub-system.

The processing of sugarcane for the manufacture of sugar, gur and khandsari plays an important role in the processing sub-system Co-operative sugar factories produce more than 51 percent of sugar in the country. The fruit and vegetable processing industries are in their infancy though with the rising in come in urban and rural sectors, the demand for processed food and vegetables is likely to increase.

Modernisation of dairy industry got a big push with the organisation of Government milk schemes to supply clean milk to cities and the establishment of milk co-operative. The Amul Dairy co-operatives success paved the way for a nationwide programme of co-operative dairying under Operation Flood.