January 21, 1961 T H E E C O N O M I C W E E K L Y

Marketable Surplus of Foodgrains Policy for Third Plan

C Muthiah P R O D U C T I O N o f foodgrains i n

the country has increased significantly du r ing the last decade. The index number of foodgrains product ion (1919-50- 100) stood at 130.1 in 1958-59. when produc­t ion reached the record level of 75.5 m i l l i o n tons, compared to 51.0 m i l l i o n tons in 1919-50 and 65.8 m i l l i o n tons in 1955-56. In spite of the increase in total and per capita ava i lab i l i ty of foodgrains, prices of cereals and pulses were higher d u r i n g the 1958-59 market ing year than in the preceding year. In our-economy a marginal surplus or margina l deficit in avai labi l i ty of foodgrains produces a dispropor­tionate effect on the price level. The marketed surplus is, therefore, as important as total production as a determinant of prices. To quote the Foodgrains Committee : " I t is variat ions in marketed surplus even more than variations in product ion which are important from the point of view of prices." The quantum of marketed surplus must keep pace w i t h the increasing purchasing power of the people as a result of investment under the Plans. . In­crease in the marketed surplus is. further , the basic precondi t ion for a transfer of labour from agricul­ture to other sectors.

Size of Holdings and Marketed Surplus

So far aggregate food product ion alone has received the attention of the planners to the exclusion of the marketable surplus. No steps have been taken to estimate, even roughly the quantum of marketable surplus required to meet the g rowing demand of the non-agricultural popula t ion in urban areas. The problem of the supply of foodgrains that ac­tual ly reaches the market should' be treated separately f rom that of

Problem of small farmers in Kodi­nar Taluk a by C. H Shah.

2 Abdul Majib Agricultural Situa­tion in India, June, I960.

3 J P Bhattacharjee, -- Agricultural Situation in India, January I960.

4 Report on Market arrivals of Food-grains during 1958-59 — Ministry

of Food & Agriculture pp 2-4, 5 SC Chaudhuri — Agricultural situ­

ation — August, 1960.

product ion. 'Marke t needs' should be ascertained and targets fixed for every year of the H a n . Ways and means of Increasing the maket-able surplus, therefore, call for im­mediate attention. For this an idea of the behaviour of marketable sur­plus is essential.

A study of farmers conducted in 1953 in Kodinar tehsil in Guja­rat1, revealed that the marketable surplus was concentrated among a relatively small section of small fanners whi le it was evenly dis t r i ­buted among the larger farmers. The latter marketed a larger pro­por t ion of their ou t tu rn than the small farmers ( see Table 1 ) .

Another study of six villages in Punjab and U P2, again showed that, the percentage of sales to total product ion definitely tended to in ­crease will the rise in the size of cult ivated holdings. In poor and backward vil lages. however. the lowest size-groups sold a consider­able por t ion of their produce pre­sumably indicat ing the extent of distress sales.

It is believed that more than half the cereals marketed are brought to the market immediately after the harvest by small farmers who are forced to do so to meet their debts, etc. Recent studies, however, go to disprove this. Small farmers in

certain villages of West Bengal, Orissa and Bihar. it was found, provided much less than one-fourth of the marketed surplus of [Kiddy and rice3. The contrast in the figures for West Bengal and Bihar on the one band and Orissa on the other (see Table 2 ) may be taken to indicate that wi th the monelisa-tion of the economy and increase in the- pressure of populat ion on land the contr ibut ion of the small farmers to the total marketed sur­plus tends to decline.

High Income Elasitcity of Demand An enquiry 1 into arr ivals of

wheat f rom rural areas to the mar­kets in the 1958-59 crop season indicates that: ( i ) Stocks, of wheat withheld by the producers in the current harvest season ( d u r i n g which production was higher than in the previous season) were larger than in the previous season; ( ii ) A major port ion of the stocks was in the hands of medium and big cultivators and not wi th small pro­ducers: (iii) The producer had be­come more price conscious than before: (iv) His capacity to with­hold wheal from the market had increased considerably due to larger production of pulses and higher prices of these crops and greater access to cheap credit.

The trends noticed dur ing the last few years indicated that

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THE ECONOMIC WEEKLY January 2 1 , 1961

marketed supplies tend to contract in an inf lat ionary si tuat ion because of larger retention by farmers to meet their consumption needs. The income elasticity of demand for self-consumption is high anion" our farmers. Food is, moreover, grown essentially on a self-sufficiency basis. Thus most of the cultivable area is under food crops and nearly two-th i rds of the produce is consumed by the producers themselves. Thus w i t h r i s ing prices, marketable sur­plus may not increase even when total product ion rises. An analysis of market arr ivals of wheat in Punjab confirms this. Higher p r i ­ces at the t ime of opening of the m a r k e t i n g * season in 1959-60 than in previous year d id not attract larger supplies in spite of higher p roduc t ion . On the contrary, they led to expectations of s t i l l higher prices and consequently blocked the flow of wheat f r o m the rura l areas.

Role of Cooperative Services

The measures usually suggested for increasing the quantum of food-grains marketed are ( i) Setting up o f g ra in banks; ( i i ) L i n k i n g up supply of credit w i t h market ing of produce; ( i i i ) Creat ing among farmers demand for manufactured goods wh ich w i l l induce them to part w i t h their produce for urban goods. Our experience h i ther to w i t h respect to the first two mea­sures is not encouraging and the t h i r d one has not been t r ied at a l l . The Reserve Bank's "Review of Cooperative Movement in India during 1956-58" reveals that by the end of 1957-58 there were 9,549 gra in banks in the country w i t h a total membership of 1,086,000. They held Rs .33,15,000 wor th of grain as deposit f rom their mem­bers. Thus not even a f r inge of the problem has been touched. The same report also reveals that the progress towards l i n k i n g credit w i t h market ing has been lardy and the integrated scheme of rural credit has not even been in i t ia led in most States. The Rural Credit Follow-up Survey shows that in 7 out of the 11 districts surveyed, fami ly ex­pendi ture accounted for more than half of the total borrowings . Cur­rent farm expenditure as a percent age of total bor rowing accounted for 20 per cent and less in 9 dis­tricts and for less than 10 per cent in 5.

The more important steps taken to improve the flow of marketed surplus du r ing the last few years

are the. development of cooperative market ing and processing, p rov i ­sion of facilities for storing agr i ­cul tura l produce and establishment of regulated markets to enforce fair market-practices. At the end of 1957-58, there were only 1899 p r i m a r y market ing societies and 2685 central societies. The i r total sales amounted 1609 lakhs tons and 2863 lakhs tons respectively. Value of foodgrains sold by Central Marke t ing Societies came to only Rs 1.09 crores, ind ica t ing the minor role played by the cooperatives.

The progress of cooperative pro­cessing is also not significant, ex­cept in the case of sugarcane. The storage facili t ies available are s imi­la r ly very inadequate as there were only 1646 godowns (both owned and h i red) wi th the p r i m a r y market ing societies and 1659 w i t h Central Societies at the end of 1957-58. The pace of establishment of regulated markets is also slow and, besides, their effectiveness has also been found to be severely l imi ted in pratice.

Mixed Farming and Crop Planning To sum up. the steps taken so far

to increase the marketable surplus and its flow to the p r i m a r y markets have touched only a fr inge of the p rob lem. M i x e d f a rming on a very wide scale ensures the inclusion of legumenous and fodder crops which increase soil f e r t i l i ty , draft power of w o r k animals and mi lk yield of cows and buffaloes. The variety of crops g rown and the increased mi lk y ie ld enable the farmers to take a more balanced and nutr i t ious diet in place of one composed of cereals only as at present. Pilot projects should be established throughout the country to demonstrate the useful­ness and profi tabi l i ty of mixed farm­ing and farmers adopting it should be encouraged through grants and loans to buy qual i ty l ives tock, supply of good seeds and fertilisers. at the proper time and in sufficient quantities,

Formula t ion of crop plans at na­tional, regional and district levels ami their enforcement in a few select­ed areas where the chances of suce-ss are greatest is another promis ing way to increase the marketable sur­plus. Crop p lann ing simplifies the complex c ropping pattern obtaining at present in most regions and there­by increases the surplus of part icular commodities in part icular regions or districts. by keeping the prices of

rice and wheat higher than those of other important crops which are also harvested at the same per iod, the farmers may be induced to sell more. The prices of wheat may be fixed in such a way that it fetches more than gram or tur (Arhar) in the market in a par t icular region where the product ion of gram and tur is significant.

Since the quantum of marketable surplus depends upon, the composi­t ion of the producers it is natural that if the number of below-subsis-tence cultivators increases. the marketable surplus is reduced. So land reforms l ike cei l ing on land-holdings may adversely affect the marketable surplus, at least in the short r i m . To offset this taxation of ru ra l incomes may be increased to restrain consumption. Also, part of the loans advanced by Govern­ment to farmers should be recovered in k i n d through cooperative societies and other agencies. F ina l ly , more care should be taken to concentrate efforts in areas where their chances of success appear best. The Inten­sive A g r i c u l t u r a l Dis t r ic t Programme is an example of this.

Improved Methods An impor tant benefit that accrues

f rom improved agr icul tura l practices and seeds is that the seed require­ments per acre are reduced. For instance, the Japanese method of cu l t iva t ing paddy requires only 20 lbs of seed per acre, against the 60-80 lbs used now. S imi l a r ly the 'U P method' of wheat cul t ivat ion requires no more than 15 lbs as against the common rate of 100 lbs per acre. The saving brought about by vigorously popular i s ing im­proved practises and extensive d is t r ibu t ion of qua l i t y seeds w i l l augment the marketed surplus. Ano­ther way to reduce the retention of foodgrains by the farmers is to in ­troduce a ru ra l hire-purchase sys­tem for items l ike agr icul tura l imple ­ments and machinery, bicycles and transport carriers which w i l l induce farmers to increase their sales.

The downward trend in prices of foodgrains in recent months affords an excellent oppor tun i ty to finalise policies and programmes aimed at augmenting and mobil is ing the marketable surplus. The pol icy for foodgrains in the T h i r d Five-Year Plan has to a im at an. increase both in the volume of product ion and marketed surplus of an order ade­quate to meet rise rise in demand.

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