ROLEOFAGRI

CULTUREI
NINDI
ANECONOMY
Sharein Gr oss Domest ic Product( GDP)has decl i
ned f r
om ov er50% at
I
ndependencet ol essthan20%cur rentl
y ,agri
cult
ureremainsthepr edominantsect orin
ter
msofempl oymentandl i
vel
ihoodwi t
hmor ethanhalfofIndi
a’swor kf
orceengagedi n
i
tast heprinci
paloccupation.Agri
cult
urest il
lcontr
ibut
essignif
icant
lytoexpor tearnings
andisani mportantsourceofrawmat erialsaswel lasofdemandf ormanyi ndustr
ies.

1.Shar
einNat i
onalI
ncome
 Theshareofagr i
cul tur
eandal li
edsectoracti
vi
ties(i
ncludesagri
cult
ure,for
estry
,
fi
shi
ng)inGDPf act orcostdecli
nedto55.3%in1950-51t o14.2%in2010-11.
 Thegrosscapit
alf ormationinagricul
tur
eandalliedsectorasaproport
ionoft ot
al
GDParound20%.
Agricul
tur
alSectorkeyIndi
cators
S.No Parti
cular
s 2010-11 2011-12
1. Shar
eofAgr icultureandal l
iedsectorstototal 14.
5 13.
9
GDP
Agri
cult
ure 12.
3 12.
1
2. GDP Gr owthr ate ofAgr i
cult
uraland alli
ed 3.5 2.5
sect
or

2.Contri
butiontoemployment
Agri
cultur
esectorprov
idesl
iv
ehoodt
onearly65% ofthetot
alpopul
ati
on.The
sectorprovidesemploymenttoaround52% ofcount
ryworkfor
ceandi sthesingl
e
pri
vatesectoroccupat
ion.

3.I
mportantsourcesofIndustr
ialDevelopment
Cott
on,jut
e,text
il
eindustri
es,sugar,
vanaspat
hii
ndust
ri
esar
edi
rect
lydependi
ng
onagr
icul
ture

4.Sharei n Expor t:I ndi af orei

gn trade deeplyassociated with agri
cultur alsector
.
Agri
cul
tureandal liedsect oraccountsf or9.1% oft otalexports.Besidesgoodsmade
wit
hther awmat eri
al ofagr icult
uresectoralsocontr
ibutes20%ofI ndianexpor ts.
Gener alpart
icular
sofI ndi
anAgr i
cultur
e
S.
N Par ti
culars 1950-51 2011- 12
o
1. Tot algeographi cal area 328.73M ha
2. For estarea 40.48M ha( 14%) 69. 63M ha
(23%)
3. Netsownar ea 118 M ha( 41%) 143. 2M ha
( 43. 5%)
4. Gr osscul tiv
at edar ea 124Mha 193Mha
5. Ar easownmor ethanonce 6Mha 50Mha
6. Cr oppi ngintensi t
y 105 135
7. Av er ageannual rainfall 1190mm
8 %ofneti rr
igat edar eat otot
alnetcropped 17% 40%
area
AO/
Economi
cs/Page1
9. Netir
ri
gatedarea 21Mha 57Mha
10. Grossir
ri
gatedarea 23Mha 76Mha
11 I
rri
gati
onintensi
ty 109 133
12 Totalf
oodgr ai
nproduct
ion 40MT 250.42MT

AO/
Economi
cs/Page2
Sour
cewi
seNeti
rr
igat
edar
eai
nIndi
a
Ar
ea–inMil
li
onhect
ares
S.No Sour
ces Ar
ea (
1950-
51) % Ar
ea(
2010-
11) %
1 Canal
irr
igat
ion 8.
3 40 17.
1 30
2 TankI
rr
igat
ion 3.
6 17 9.
7 17
3 Wel
lIr
ri
gat
ion 6.
0 29 29 51
4 Ot
her
s 3.
0 14 1.
1 2

St
atewi
sear
ea,
product
ionandpr
oduct
ivi
tyf
orMaj
orcr
ops

S.N Cr op Area Pr
oduct
ion Pr
oduct
ivi
ty
o
1.Ri
ce
WestBengal 5. 63 1 West 14.43 1 Punj
ab 4010
(13.4) Bengal (16.10)
UttarPradesh 5.19 2 Punj
ab 11.24 2 Tami
lNadu 3070
(12.3) (12.26)
Oddisey 4.37 3 Uttar 10.81 3 Andhra 3600
(10.4) Pradesh (12.83) Pradesh
Tami lNadu 1.85 9 Tami l 5.67 (6.66) 6 West 2500
(4.4) Nadu Bengal
I
ndi a 42.0 I
ndi a 89.
1*(
22) *
2 I
ndia 2100
2.Wheat
UttarPradesh 9.67 1 Uttar 27.52 1 Punjab 4462
(34.10) Pradesh (34.25)
Madhy a 4.28 2 Punjab 15.07 2 Har y
ana 4350
Pradesh (15.1) (18.71)
Punjab 3.52 3 Har
yana 10.50(13.
9) 3 Uttar 3000
(12.4) Pradesh
I
ndi a 28.5 I
ndi
a 80.8* (
11) *3 I
ndi a 2900
3.Pul
ses
Madhy a 4.94 1 Madhya 4.
30(
30) 1 Madhya 871
Pradesh (21.2) Pr
adesh Pr
adesh
Raj
ast
han 3.50 2 Mahar asht 2.
37(
16) 2 Uttar 748
(15.2) ra Pradesh
Mahar
asht
ra 3.38(14) 3 Uttar 1.
90(12) 3 Mahar asht
r 702
Pradesh a
Tami
lNadu 0.53 1 Tami 0.
2(1.
3) 1 Tami lNadu 382
(2.3) 0 Nadu 2
Indi
a 23.8 I
ndi a 14.
6* (
25) *
1 I
ndi a 660
4.Oi
lseeds
Madhy a 6.77 1 Madhya 7.
64(
30.
6) 1 Tami
lNadu 1900
Pradesh (26.
6) Pr
adesh
AO/
Economi
cs/Page3
 Raj
ast
han 4.13(16) 2 Raj
asthan 4.
41(17.7) 2 Punjab 1300
Mahar
asht
ra 3.88 3 Guj
arat 3.
10(12.4) 3 Madhy a 1120
(10.8) Pradesh
Tami
lNadu 0.50 1 Tamil 0.
94(3.
7) 1 Guj arat 1100
(1.9) 0 Nadu 2
I
ndi
a 25.96 I
ndia 24.
88*(18) 3 I
ndia 950

Ar
ea–Mil
li
onhect
are,Producti
on–Mil
li
ontones Pr
oduct
ivi
ty-kg/
hect
are
Not
e*i
ndi
cat
estheworl
dshar eandI
ndi
arank

AGRI CULTURALDEVELOPMENTTHROUGHFI VEPLANSI NINDIA

Fi
rstf
ivey
earpl an
 Focusedont hei ncreasedpr oducti
onoff oodgr ai
ns.
 Thet argetoffoodpr oduct i
onwasf ixedat62mi ll
iontones.
 Communi tydev elopmentpr ogrammesandext ensionservicesweregiv
en
pri
mei mportancei nt hisplan.Thenat i
onal extensionservi
ceswasi nit
iat
edin
1953.
 Inordert oachiev et argetedproductionlev elemphasiswasl ai
donimproved
ti
ll
agepr acti
ces, useofi mpr ovedseeds, fert
ili
zers,wateretc.l
andrecl
amati
on
andlanddev el
opmentmeasur eswer ealsogi venimpor t
ancedur i
ngthefi
rst
fi
vey earplan

Secondf
iveplan(1956-61)
 Levelofproducti
onwasar ound76mi ll
iontones
 Targetedfoodproducti
onwasenv isagedat24%
 Incr
easenumberofAgr i
cul
tural
creditsoci
eti
es
 Netirr
igatedareaincr
eased51mi l
lionhect
aresto70mi
l
li
onhect
ares

Thi
rdf
ivey
earplan(1961-66)
 Selfsuffi
cienti
nagr icultur
alfoodgrainproducti
on
 Producecommer cial cropstomeett heexports
 Dev el
opmentofl argei rri
gati
onproj
ectandsmal lir
ri
gat
ionpr
oject
s
 Concent r
atedonSoi l conservati
onprogrammes
 Dev el
opmentofcooper ati
ves
 IAAPpr ogrammest artedin1964-65
 Nationalseedcor poration-1963
 NCDCandAFCI N1963

AnnualPl
ans(1966-69)
 HYVPl aunched-
1967
 Importancetominori
rri
gati
onschemes
 DevelopmentofAgroindust
ries

Four
thfi
veyearpl
an(1969-
74)
 Annualgr
owthof2.8%i
nagr
icul
tur
e
AO/
Economi
cs/Page4
  Economicdevelopmentofsmal
lcul
ti
vators
 Agri
cul
tural
researchandext
ensi
onprogrammes

Fi
ft
hfi
veyearpl an(1974- 1979)
 Sust ainabl
edev elopmenti nuseofmanures
 Ef f
icientdistri
butionoff erti
l
izers
 KVKest ablishment( 1977- 78)
Si
xthf
ivey
earPl an(1980- 85)
 Sust ainabl
ei ncreasepul sepr oduct
ion
 Selfsuf fi
ciencyi noilseedpr oducti
on
 NABARDest abl
ishment( 1982)

Sev
ent
hfi
veyearplan(1985-90)
 Aim:Solv
ingthepr oblem ofRur
alpoverty,
rural
unempl
oyment
,reducest
he
regi
onali
mbal anceindev el
opment
 Ruralemploy
mentpr ogrammeswer elaunched

Ei
ghtf
ivey
earplan( 1992- 97)
 Togener atesur plusoffoodgrainforexport
 At t
ainselfsufficiencyi
npulsesandoi l
seeds
 Spr eadgreenr evoluti
onineaster
nr egi
on
 Impr ovi
ngef f
iciencyofirr
igat
ion

Ni
nthf
iveyearplan( 1997- 2002)
 Toensur efoodandnut r
iti
onal securityputatar getof4.7%growthin
agri
cult
ur e
 SchemeofKi sanCr edi
tCard( KCC)wasi nt
roducedi n1998-99
 AnnouncementofNat i
onalAgr icult
urePol i
cy(2000)
 Technol ogyMi ssiononCot ton
 Legislati
ononPl antVariet
yPr ot ect
ionandFar mer s'
Right
s
 I mplement ati
onoft heNational Agricult
ureInsur anceScheme/Rasht
ri
yaKr
ishi
BimaYoj ana( 1999-2000) .

Tent
hfi
vey earplan2002-2007
 Increasi
ngcredi
tflowbyt oallf
ar mers
 AnnouncementofNat ionalAgricult
urePoli
cy
 Tomakeagr i
cult
uremor eeffi
cientleadi
ngtoincreasedout
putand
empl oyment
 Prov i
deadequateirr
igati
onf aci
lit
iesinTri
balareas
 Intr
oductionofRuralGodownScheme

El
event
hfi
vey earplan(2007-2012)
 Doubl i
ngtherateofgrowthofir
ri
gatedarea
 Reclaimingdegradedlandandfocusingonsoi
lquali
ty
 Div
er si
fyi
ngintohighvalueout
puts,f
ruit
s,v
eget
ables,f
lower
s,her
bsand
AO/
Economi
cs/Page5
 spi
ces,
medi
cinal
plant
s.

Pol i
cyt owar dsagr i
culturebyGov er nmentofI ndia
Nat
ionalAgr iculturePol i
cy2000
 Gr owt ht hati sbasedonef fi
cientuseofr esour cesandconser v eoursoi l
,wat er
andbi odi versi
ty .
 Agr iculturalgr owt ht hatis sust ainablet echnol ogicall
y ,env ironment ally and
economi cally.
 Theuseofbi ot echnol ogywi llbepr omot edf orev olvi
ngpl antswhi chconsume
lesswat er,ar edr oughtr esistant,pestr esistant,cont ainmor enut ri
tion,gi ve
highery iel
dsandar eenv i
ronment allysaf e.
 Bal ancedandconj unct i
veuseofbi omass,or ganicandi norgani cf er t
il
isersand
cont r
olleduseofagr ochemi calsthroughI NM andI PM willbepr omot ed.
 A maj ort hrustwi l
lbe gi v en to di versif
ying agr i
culturet hr ough ‘ Integr ated
Far mi ng’.
 Rat ionalut i
l
isat i
onandconser vati
onoft hecount ry’
sabundantwat err esour ces
wi l
l bepr omot edt hroughI ntegratedWat erManagementpr actices.
 Gov ernmenthasdeci dedtosetupat hrustforef f
ici
entnut r
ientcy cling,nitrogen
fixat i
on, organicmat teradditi
onandf ori mprov ingdrainage.
 Concer tedef f
or tswi llbemadet opr omot et raditi
onalpr acti
ces,knowl edgeand
wi sdom t ohar nesst hem forsust ainableagr i
cul tural
growt h.
 I ncr easesi nt heMi nimum Suppor tPr i
ce( MSP)f orwheatandr iceinaccor dingt o
inflationaryef fect

Nati
onalCommi ssiononFar mers Chairman:Dr .M.S.Swami nathan
Keyrecommendat ions
 Far mer-
fri
endlysuppor tserv
icescov er
ingextension,trai
ningandknowl edge,
connecti
vi
ty,creditandinsurance
 Assur edandr emuner ati
vemar keting.
 Set t
ingupofanI ndianTradeOr ganization
 Maki ngtheCommi ssi
ononAgr i
cultureCostandPr i
cesintoanaut onomous
stat
utor
yor ganizati
onwi t
hMSPatl east50%mor ethanthecostofpr oducti
on
 LaunchofaRur alNon-farm Livel
ihoodI ni
ti
ati
ve( RNFLI .

Vi
sheshKrishi
UpajYojana
Obj
ecti
veofthescheme
 Topr omoteexportoffr
uit
s,veget
ables,
flower
s,minorf
orestproduce,
andt
hei
r
val
ueaddedproducts,
byincenti
vi
singexport
ersofsuchproducts.

Nat
ionalWaterPol
icy
:1987and2002
 Gov er
nt hemanagementoft
hecount
ry’
swat
err
esour
ces

JalAbhi
yanProgramme(2005)
 Methodforrechar
gingofgr
oundwater
 Managementofsur f
aceandgroundwat
erf
oref
fi
cientut
il
izat
ion

AO/
Economi
cs/Page6
Nat
ionalFoodSecur i
tyMi ssi
on( 2007)
 Thr eecomponent s
 Nat ionalFoodSecurit
yMi ssi
on-Rice
 Nat ionalFoodSecurit
yMi ssi
on-Wheat
 Nat ionalFoodSecurit
yMi ssi
on-Pulses
 Mi ssionobject
ive:
Increaseproducti
onofr
iceby10mil
li
ont
ons,wheatby8
mil
liontonsandpulsesby2mi ll
i
ontonsbytheendoft
heEl
event
hPlan(2011-
12)
.

AO/
Economi
cs/Page7
 Overvi
ewofTami lNaduAgr i
cultur e
 Tami lNadu shar es about4 % i nr espectoft he geogr aphicalar ea,7 % of
populat i
onand3%ofwat erresourcesoft hecount r y
.
 Thegr osscr oppedar eainaccount edf orabout38%oft het ot al
geogr aphicalarea,
ofwhi ch56%oft hel andwasi r
ri
gat ed.
 Thecont ri
but i
onofagr icult
ure(includingalli
edact ivi
ties)oft heSt atet otheGr oss
StateDomest icProduct( GSDP)atConst antpricesaccount sfor9. 4%i n2009- 10.
Landusepat ternofTami lNadu
Ar ea-Inmi l
l
ionhect ares
S.N Par t
iculars Ar ea % Area % Ar ea %
o (
1960- (2009- (2010-
61) 10) 11)
1. For estar ea 1.
86 14.3 2.1 16.3 2. 1 16.3
2. Bar ren and 0.
09 7.3 0.05 3.8 0. 04 3.8
Unculturablel and
3. Per manentPast ur es& 0.
34 0.11 0.8 0.109 0.8
othergr azi
ngl ands
4 Culti
vabl ewast e 0.
71 5.4 0.32 2.5 0. 33 3.8
5. Land putt o non Agr i 1. 29 2.18 16.7 2. 17 16.8
Purposes
6. Mi scellaneous t
ree 0.
24 1.9 0.25 1.9 0. 25 1.9
crop not i ncluded i n
netarea
7. Cur rentf al
low 0.
98 7.5 1.12 7.8 1. 01 7.8
8. Ot herf all
ow 0.
62 4.8 1.54 11.8 1. 58 12.1
9 Netsownar ea 5.6 46 4.89 37.5 4. 95 38
Geogr aphicalar ea 13.03

Gener
alpar
ticul
arsofTami
lNaduAgr
icul
ture
S.
No Part
icul
ars 1960-61 2009-
10 2010-
11
1. Netsownar
ea 5.
9Mha 4.
89Mha 4.
95
2. Gr
osscul
ti
vat
edar
ea 7.
3Mha 5.
57Mha 5.
75
3. Ar
easownmor
ethanonce 1.
3Mha 0.
68M ha 0.
79
4. Cr
oppi
ngi
ntensi
ty 1.
23 1.
139 1.
16
5. Av
erageannual
rai
nfal
l - 911mm 920mm
6. %ofnetir
ri
gatedar
eat
otot
alnet 41% 58% 58.
5
cr
oppedarea
7. Neti
rr
igat
edarea 2.
46Mha 2.
86Mha 2.
91
8 Gr
ossi
rr
igat
edar
ea 2.
84Mha 3.
23Mha 3.
35Mha
9. Ar
eai
rr
igat
edmor
ethanonce 0.
2Mha 0.
68Mha 0.
69Mha
10. I
rr
igat
ioni
ntensi
ty 1.
16 1.
13 1.
15

AO/
Economi
cs/Page8
AO/
Economi
cs/Page9
SourcesofI rrigationi nTami lNadu
Wateri sani mpor tantdet ermi nantfactorofpr oduct i
onofcr opsi nagriculture
sector.Intensiveandext ensivecul ti
vationofl anddependmai nl
yont heav ail
abili
tyof
water.Medi um and mi nori rr
igation schemes ar ei mpl emented i nt he stat ef or
augment i
ngthei rrigationf oragri
cul ture.
Area–i nMi ll
ionhect ares
Sources 1960- 61 % 2009- 10 % 2010- 11 %
Canals 0.88 36. 5 0.76 26.5 0.74 25.7
Tanks 0.93 38 0.501 17.5 0.53 18.5
Open Wel l
s and 0.59 24 1.60 55.5 1.62 55.5
Tubewel l
s
Others 0.04 1.5 0.012 0.5 0.3 0.3
Note: HighIrr
igationI nt ensit
y-Kany akumar i
HighCanal I
rrigatedar ea–Ti ruvarur( 0.14mha) ,Thanj
avur( 0.13mha)
HighTankI r
rigatedAr ea–Kancheepur am(0.08mha) ,
Sivagangai (0.
06mha)
HighWel lI
rr
igatedar ea–Vi ll
upuram, Coimbator e

Dimensi onofFoodPr oduct

ionoft
heStat
e2010-
11
Part
icul
ars Gr
ossar
ea GrossArea %ofir
rigat
ed
sown(mha) I
rr
igat
ed( mha) area
FoodGr ains 3.
74 1..
6 62.2
Foodcr ops 4.
27 2.
69 63.2
Nonf oodcr ops 1.
48 0.
61 44.4
TotalfoodandNonFoodcr ops 5.
75 3.
35 58.5
(totalareaofculti
vat
ion)
Croppi ngi
nTami lNaduStat e(
2010-11)
Crop Ar
ea Pr
oduct
ion Product
ivi
ty
2009- 2010- 11 2009-10 2010-11 2009-
10 2010- 11
10
A)Cer eals
Rice 1.84 1.9 5.66 5.72 3070 3040
i
)Kur uvai 0.29 0.3 0.99 1.04 3500 3570
i
i)Samba 1.45 1.4 4.25 4.27 1950 2887
i
ii)
Nav arai 0. 11 0.13 0.41 0.47 3510 3550
Maize 0.24 0.23 1.13 1.02 4600 4450
Total 2.49 2.53 7.31 6.81 - -
cereals
B)Pul ses 0.53 0.63 0.241 0.245 380 385
Totalfood 3.03 3.17 7.51 7.59 2470 2610
grains
(A+B)

AO/
Economi
cs/Page10
Cr
op Ar
ea Product
ion Product
ivi
ty
2009-10 2010-11 2009-10 2010- 11 2009-
10 2010-11
Cot
ton 0.
11 0.
12 0.22* 0.
24 385 K-317
R-480
Sugar cane 0.
29 0.31 29.75 34.
25 100 108
Oilseeds 0.
90 0.85 0.
99 1.00 -
- --
Spicesand 0.
14 0.15 -- -
- -
- --
condiment s
Fruits 0.
39 0.38 -- -
- -- -
-
Veget ables 0.
22 0.22 -- -
- -- -
-
Area–mha;Pr oduct
ion–Mi ll
iont ones;Yiel
d–kgs/ ha* mill
i
onbal es
SevenSeri
esofIndexNumber sofTami lNaduAgr i
cul
turalEconomy
Base:Av er
ageoft ri
ennium ending1993-94=100
S.No Par t
iculars I
ndexNo
2009-10 2010-11
1. I
ndexNo.ofAreaundercr ops 78 81
2. I
ndexNo.ofproducti
onofcr ops 116 118
3. I
ndexNo.ofproducti
v i
tyofcr ops 113 111
4. I
ndexNo.ofcroppingpat tern 130 130
5. I
ndexNo.ofnetAreasown 84 85
6. I
ndexNo.ofcroppingpat tern 93 96
7. I
ndexNo.ofnetproduct i
v i
typerhectare 138 137

STATEAGRI CULTURALPOLI CI
ES
SecondGr eenRev ol ut
ioninTami lNadu
Mot o:Doubl ingProducti
on; tri
plingf ar
mer sI ncome
 Increasingthenetcul ti
vabl
ear eaandpr oductiv i
tywithcropspeci
fici
nter
vent
ions.
 Soilhealthmanagementappr oaches
 Wat erresour cesmanagement .
 Inputsuppl ymanagementsy stem.
 Cropspeci ficstrategi
estobr idget hey i
eldgap.
 Impr ovi
ngt heeconomi cst
at usoff ar mersbyi ncr easi
ngt he
 Diversif
y i
ngcul ti
vati
oninfav ourofcommer cial crops
 Strengtheningr esearchandext ensionser v
icesi nTami l
Nadufor“end-
to-
end”
involvementofex tensi
onst affwi t
hi ndi
vidualf armer .

AO/
Economi
cs/Page11
 AGRI CULTURALCREDITSYSTEM I NI
NDI A
NeedofAgri
cul
t uralcr
edit
 Financeshoul dsti
mulateandenhanceproduct
ivi
tyandhelpt hefarmerst
oadopt
moderntechnologies
 Tomai nt
ai nthefarmliqui
dit
yandensuretomeett hef
inancialobli
gati
onoft
he
f
arm

Sourcesofagricult
uralcredit
1.I
nstit
uti
onalsour ces:Government ,
Scheduledcommer ci
albanks,
Regional
Rur
al
Banks, 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 Cooperat
ives
2.Non-I
nstit
utionalsources:Relati
ves,l
andlords,
trader
s,Pawnbroker
s

Cl
assi f
icati
onofCr edi
t
a)Basedonpur pose
i
.Product i
onloan
Creditgiv
entof ar
mersforcr
oppr oduct
ion
I
talsocal l
edasseasonalagr
icul
turall
oansorshor
tter
mloans

i
i
.Inv
est
mentloans
 Loangi
venf orequipmentandmachi
ner
ypur
chase,
const
ruct
ionofwel
l
s
 Eg-Tr
actorl
oan, Pumpsetloan

i
i
i.Mar
keti
ngloans
 Helpi
ngthefarmerstoovercomedist
resssal
esandmarkett
hepr oduceinbett
er
way
 Basedont hewarehouserecei
ptsbyadvanci
ngloanf
or75percentvalueofthe
product

i
v.Consumpt
ionloans
 Loangivenforunpr
oducti
vepurposeadvanci
ngloanattheti
meofnatur
al
cal
ami
ties
 Loangrantedongroupguarant
eebasiswithmaximum numberoft
hreeyears
 Rateofinter
est–11Percent
 Schemesof fer
stoIRDPbenefi
ciar
ies,
SmallandMargi
nalfar
mers,
Ruralart
isans

b)BasedonTi me
i
. Shortter
ml oan(6-
18mont hs)
 Al lcr
oploansareshortter
mloansrepaymentaccor
dingt
odur
ati
onofcr
op.
 Cr edi
trequi
redforal
ltypeoff
arm operat
ions
i
i
.Medi
um termloans(15monthsto5y ears)
 Loanrequir
edbythefarmerf
orbr i
ngingtheimprov
ementoff
arm busi
ness
 Eg–Mi lchani
mal,sheeppurchase,Elect
ri
cmotor
i
i
i.Longtermloans(5year
sto20y ears)
 I
nv est
mentandtermloansbringi
ngtheper
manenti
mpr
ovement
sini
nland
 Eg–Pur chaseofTr
actors,
RisingOr
chards
AO/
Economi
cs/Page12
c)BasedonSecur it
y
i
.PersonalSecurit
y
 Borrowerhimselfasguar antor
.
 Thirdpartyguaranteemayormaynoti nsi
stthem
i
i.Col
lat
eralsecuri
ty
 Keptindivi
dualpropert
iesthatpledgedtosecurealoan
 Mov ablepropert
iesofindivi
dualsareoff
eredassecuri
ty
 LICbonds, warehouser ecei
pts,j
ewell
ery,machiner
y,l
ivest
ock

i
i
i.Chat
tel
loans
 Specifi
ctypeofl
oanwithpar
ti
cul
arcat
egor
yoflender
s
 Loansobtainedbypl
edgi
ngmovabl
eproper
ti
es

i
v.Mor
tgagel
oans
 Loanobtai
nedbysecur
ingi
mmov
abl
epr
oper
ti
es

d)Basedoncont actwit
hf armers
i.Dir
ectloans:Di
rect
lyt
ot hefar
mer sbyi
nsti
tuti
onalagenci
es
ii
.Indi
rectloans:
Loangivenfororgani
zat
ionsforconstr
ucti
onsofwar
ehouses,
mar
ket
yards.

e)BasedonAppr oach
i
.Indi
vi
dualApproach
 Loanadvancesdi
rect
lytofarmer
stopot
ent
ial
bor
rower
 Eg-Cropl
oansandDairylaons

i
i
.Ar
eaapproach
 Loansadvancesbysel
ect
edar
eadev
elopment

i
i
i.DI
Rloans
 Loansadv
ancest
onweakersect
ionat4per
centl
evel

Agr
icul
tur
alCr
edi
tsy
stem i
nIndi
a

AO/
Economi
cs/Page13
I
nstituti
onalAgenci
esf orf
inancingAgricul
tur
einIndia
1.Cooper at
iveFi
nance
MeansofCooper at
ion:Iti
sf orm oforgani
zati
onwher ei
npersonsvol
unt
ari
l
yassoci
ate
togetherashumanbei ngsont hebasisofequali
tyfort
hepromotioncommoneconomic
i
nterestofthemselv
es.

Hi
stor
yofCooperat
ives
 1904–Fi r
stcooperat
iveactandr
emodi
fi
edi
n1912gav
epr
ovi
sionf
orr
egi
str
ati
on
ofal
lty
peofsociet
ies

Probl
emsi near l
ycooper atives
Problemsl i
keunduedel aysandi nadequatecr editgov ernmentappoi ntedGadgil
Commi tt
eeandadopt iont her ecommendat ion
 1944-adopt ionofl imi t
edl i
abili
tyandi tmeanst hatassest hecreditwor t
hiness
basedonr epay ment
 Alsolinkcr editwi thmar keti
ng
 1961- 62 – B. P.Pat elCommi tt
ee – Cooper at iv
e pr ovi
de l oan tof armerf or
agricult
ural oper ati
onsandl andi mprovements
 SriMeht acommi t
tee–DCBshoul dassurether esponsi bi
l
ityofPACS
 1969-Al l
Indi aRur al CreditCommi ttee(Chair
manshi p-Venkatapaiyah)
Reor ganizet hecooper at
iveintovi
ableuni t
Great erflexibili
tyinconversionofshortt erml oansintomedi um ter
m
loans
Si
mpl if
icationofappl icati
onanddi sbursal partofloans
Str
uctureofCooper ativecr edit

Shor
tandMedi
um t
erml
oans Longt
erml
oans

AO/
Economi
cs/Page14
St
atecooper
ati
veBanks(
Stat
elev
el) Cent
ral
landdev
elopmentbank(
Stat
e
l
evel
)

Di
str
ictCooper
ati
veBanks(
dist
ri
ctl
evel
) Pr
imar
ylanddev
elopmentbank(
Tal
uk
l
evel
)

Pr
imar
yAgr
icul
tur
alCooper
ati
veSoci
eti
es(
Vil
l
agel
evel
)

Stat
eCorporativ
eBank
 Li
nkbet weenRBIandPACS.
 Member sandt heirbanks-DCCB, PACS
Speci
fi
cfunctions
 Formulatedevelopmentpl anregardco-operar
ti
veinst
it
uti
ons
 Coordi
nat et
hepol ici
esofcooper ati
veswiththegover
nment.
 Unif
orm credi
tpol i
ciestothest at
e.
 BankerbanktoDCCBandgr antsubsidi
estoDCCB.

Di
str
ictCooperat
iveBanks
 Basicall
ymeantt omeetthecr
editr
equir
ementsofPACS.
 Under t
akebankingbusi
nessprov
idecredi
ttoneedypar
ti
es.

Member s:
Marketi
ngsocieti
es,Consumersoci
eti
es,
Farmerssociety,
Urbanbank,
PACS
Funct
ions
 Superv
iseandinspecttheacti
vi
ti
esofPACS
 Undert
akenotcreditacti
vi
ti
esli
kesuppl
yofseeds,f
ert
il
izersandsomeconsumer
goods.
 Acceptdeposi
tfrom membersociet
iesandpubl
ic.

Pri
mar yAgricult
uralCooper ativ
eSoci et
ies
 Consequentt otheenact mentoft hecooperativesact1904.
 Oper ati
onsf ol
lowingthegui del
inesofRaffeisenmodel .
Raff
eisenmodel
 Limi t
edl i
abil
it
y
 Limi t
edar eaofoperati
ons
 Honor ar
ymanagement
 Vol untarypart
ici
pati
onofv il
lages
Mainfuncti
ons
 Provideshor tterm andmedi um termloans.
 Suppl ytoagr i
cult
uralinputsandsomeessent ialcommoditi
es.
Speci
ficfunctions
 Bor rowadequat ef undsf r
om DCCBandhel pt hemember si
nfinanci
almat
ter
s.
AO/
Economi
cs/Page15
  Attractl
ocalsavings.
 Prov i
demachiner yonhi
rebarstofarmer s.
 Involvei
nmar ketingonf
arm products.
 Topr ovi
destorageandmarketingfacil
i
ties.
 Supplyofconsumergoods.

Centr
allanddev el
opmentbanks
 Providelongtermf i
nancet
oPLDB.
 NABARD–r ef
inanci
ngagencyt
oCLDB
Member s:
 BranchesofCLDB
 PLDS
 Indiv
idualentr
epreneursar
eint
hest
ate

Pur
veyl
oans
 Tolandrecl
amationandl
anddevelopment
.
 Purchaseofagr
icul
tur
almachi
neryanddevel
opment
.

Pri
mar yAgr iculturalCooper at i
veSoci eties
 1920-Punj abl at
erinMadr as,
My sore,
Assam nami
ngasmor
tgagebank
 1974–RenamedasLDB
Functions
toprovidel oanst odev elopmentl and
toprovidel oansf ormi nori rr
igati
on
toprovidel oansf ormachi nerypur chase
provideloanf orf arm buildingsconst r
ucti
on
tomobi li
zer uralsav i
ngs

LAMPS–BAWAt eam
 Givenal lt
ypesofcr editincl
udingcredi
t
 Objective:Int ensi
fi
cation and Moder nizat
ion ofagr i
cul
tur
e wit
h appropriate
technicalgui dance and i mpr ovi
ng the mar keting ofagri
cul
tur
aland f orest
product si
nt heTr i
balareas.
 Member s:Alltri
beswi t
hv ol
untarybasis
 Capital:Sharecapi t
alofmember s,St
atefunds, Reserv
efundsanddeposi
ts
 Management :Fivefrom Tribal
’s,t
wo–nont r
ibal’
s,two–nomi nat
edbyr egional
cooper ati
ves,two–nomi neefrom Leadbank.

FarmersServi
ceSoci eti
es
 Wellorganizedregister
edcooperat
ivebodies
 Meetingthespecial needsofweakersect
ioninRuralAreas
 Reorganizedin1971andsponsor edbyLeadBanks
 Operati
onAr ea-LaunchedinSFDAANDMFALdi st
ricts
Funct
ions
 Tosupplyal lt
ypeofl oanstoweakersect
ionli
keSF, MF,AL,
RA.
AO/
Economi
cs/Page16
  Tosuppl
yi nput
sonr egul
arbasi
s
 Toencouragedairy
,Poult
ry,
fi
shr
ery
 Tomobiledepositandsmallsav
ingsf
rom weakersect
ions

Nat
ional
izationofbanks
Bef
oreNationalization
 Credi tneedt ofar
mer s,
SSIandweakersect
ionareignored
 Agr i
cul t
ural dependent¾populat
ionsbut1percentonlytothi
ssect
or
 Direct i
oni ssuedbygov ernmenti
gnorebybanks

IPhaseofNat
ionali
zationofBanks
14banksnat ional
izednotlesst
han200cr
orei
n1969accor
dingt
oBanki
ng
compani
esOrdinance1969.

Li
stofbanksNati
onali
zed
Central
BankofIndia UnionBankofI ndi
a
BankofIndi
a PunjabNat i
onalBank
BankofBaroda SyndicateBank
Unit
edCommer cialBank I
ndianBank
CanaraBank Indi
anOv er
seasBank
Unit
edBankofIndia Denabank
All
ahabadBank BankofMahar astra

I
IPhaseofNat ionalizat
ionofBanks
6banksnat i
onalizedin1980
PunjabandSi ndBank
Andr aBank
NewBankofI ndia
Vij
ay aBank
OreientalBankofCommer ce
Corpor ati
onBank
Obj
ecti
veofnat ionali
zationVsAgr i
cult
ure
 Toi ncreaset hecr edi
tfl
owt oagricult
ureaccordi
ngt ot
hegov er
nmentagri
cul
tur
al
pol
ici
es
 Eliminatet heuseofbankcr edi
tforspeculati
veandunpr oduct
ivepur
pose
I
mpacts
 Pr i
ori
tysect orcrediti
ncreasetomor ethan39per cent
 Mor ethan10000br anchesinRural ar
eas

St
ateBankofI ndi
a
 Imper i
albankofIndi
awasf or
medin1921amalgamatingBankofBengal
,Bankof
Bombay ,BankofMadras
 Pr ev
iouslynocentr
albanki
nthecountr
yandissuingnotes
 Imper i
albankwasnational
i
zedwit
hothersubsi
diarybanksandnamedasStateof
AO/
Economi
cs/Page17
 Indiaandl argestcommer cialbankinIndi a
Speci
ali
zedBr anches
 Thecommer cialbanksopenedspeci al bankstocaterofweakersect
ionsi
nrur
al
areas.
 Interestrateismor et han0.5percentofcommer ci
albanks.
o Agr icul
tural Dev
elopmentBr anches–SBI
o Gr amaVi kasKendr as–BankofBar oda
o Rur alserviceCent r
es–DenaBank
o Far m cli
nicCent r
es–Sy ndicateBank
o Rur alCreditandDev el
opmentDi vi
sion–IndianOver
seasBank

Br
anchExpansionScheme( 1969)
 Mainobj ect
ive:
RapidExpansionofruralbr
anches
 Duetot hatmorethan34t housandbranchesinrur
alar
eas

Vi
ll
ageadopt ionScheme
 I nt
ensi vef
inancingint
her uralar
easwher ethereislotofpotent
ialf
oragr
icul
tur
al
development
 Theschemecov er
sallt
hef armerswi t
houtexcept i
on
 Adopt edbankt otakespeciali
nteresti
nov er
alldevelopmentofthevil
l
ageby
coordinati
ngandcooper ationofotherfinancingagenci es.

LeadBankScheme( 1969)
 Recommendat i
oncommittee:F.
K.F.
NarasimanCommi t
tee
Mainobject
ive:Ef
fect
ivei
mplementat
ionsocial
obj
ect
ives

Speci
fi
cFunct i
onsofLeadBank
1.Surv eyingt hepot enti
alar easofdev elopmentofbanki ngint hedistri
ct
2.Ident i
fyingt hebusi nessest abli
shmentwhi chwer ehither
to dependentuponnon
insti
tut i
onalagenci esandf inancingt hem t oenabl ethem t oraisetheirresour ces
andsur plusesf rom theadv ancesmadebyt hebank
3.Exami ningt hemar ketf acili
tiesav ai
lablef ordisposalofagr icult
uralandi ndustr i
al
commodi ti
esandl i
nkingcr editwithmar keti
ng
4.Dev elopcont actsandmai ntaini
ngl i
aisonwi thgov ernmentandot heragenci es
5.Prepar ingdi str
ictcreditplansmuchaheadoft heseasonwi t
ht hehelpoft echni cal
commi tt
ee.
6.Formul ate bankabl eloan schemes hav i
ng labouri ntensive or i
entation and
gener ateempl oyment .
7.Disbur sel oanst oincreasi ngpr oduct iv
ityofl andandal liedact ivi
ti
esasr educe
underempl oymentandt husi ncreasei ncomel evel.
8.Givemaxi mum cr edittoweakersect i
onsoft hesocietyforpr oductiv
epur pose

RegionalRur
alBanks(1975)
Recommendationcommi t
tee:
M.Nar
simham commi
tt
ee
Objecti
vesofRRB
 t odevel
oprural
economy ;
AO/
Economi
cs/Page18
  topr ovidecr edi
tforagricultureandal l
i
edact i
vit
ies;
 toencour agev i
l
lageindust r
ies, arti
sans,carpenters, craft
smen,
 tor educedependenceofweakersect i
onsonmoney -
lenders;
 toi denti
fyaspeci fi
candf unctional gapinthepr esenti nsti
tuti
onalst
ructure;
 tosuppl ementt heot herinstit
ut ionalagenciesincr editdeli
v er
ytorur
alareas,
 tomakebackwar dandt ri
bal areaseconomi cal
lybet t
erbyopeni ngnewbr anches.
Sponsorship
 Ev eryRRBsi ssponsoredbyacommer cialbank,usual lytheleadbankoft he
district
.Insomear easSt ateCooper ati
veBanksandPr iv
ateBanksareallowedt o
sponsorRRBs.
Juri
sdi
ction
 Theoper at
ionalareatobecov eredbyeachRRBv ari
esf r
om onet otwodi str
ict
s
foref fi
cientfuncti
oning.
 Eachbr anchofaRRBi sexpect edt oser veapopul at i
onofappr oxi
mately20,000.

Dif
ferentialRateofInterestScheme( 1975)
Recommendat i
on: RBIcommi tteeunderthechairmanshi
pofB.K.
Hazare
Schemeobj ect
ive
 Loansext endedt oweakersect i
onswhodonotpossest angibl
esecur
it
yata
concessionalrateof4per centint
erestperannum.
 I tappli
cableonlyinselect
edbr ancheslocatedi
nbackwarddi
str
icts

NABARDExi stence( 1982)

 Recommendat i
on commi tt
ee: CRAFI CARD commi ttee Chai r
manshi p of Dr .
Siv araman
 Deposi tsfrom st at
egov ernment
Obj
ect
iv esOfNABARD
1.Aanapexofr ef i
nancingi nsti
tutionNABARD pur veysalltypesofcreditneededfor
t hef ar m sectorandr uraldev elopment
2.Responsi bil
it
yofpr omot ingandi ntegr
ati
ngr uraldevelopmentact i
vit
iest hr
ough
r efinance
3.Pr ovidingdi r
ectt oanyi nsti
tutionsororganizati
onorindividualsubj
ecttoappr oval
bycent ralgover nment
4.Ef f ectivecatalyticagentf orrur aldevel
opmentandf ormul ati
ngruraldevelopment
pl ansandpol i
cies

Funct
ionsofNABARD
Credi
tacti
vit
ies
 Part
ici
patesinfi
nali
zat
ionofannualact
ionplan
 Monitori
ng
 Laydownt hetermsandcondit
ionsofcredi
tinst
it
uti
ons
 Refi
nance:Shortter
mrefi
nance;Longtermrefi
nance

LEVELSOFREFI NANCE
 Pi
lotr
ainfedfarmi
ngproj
ects–100%
 Wastelanddevel
opmentschemes-100%
AO/
Economi
cs/Page19
  Agroprocessinguni
ts-75%
 Biogasschemes-75%
 Farm mechanizat
ion–50%
 Ruralel
ectr
if
icati
oncorpor
ati
on–50%

Ser
viceAreaAppr oach(1989)
Recommendat i
oncommi t
tee:Dr.P.D.Ohja
NeedofServi
ceAr eaapproach
 t oensureplanneddevel
opmentandqual it
ylendi
ng
 t omakebr anchmangersresponsi bleforvil
lagecredi
tpl
an
 gr assrootplanni
ngconcernwi t
hv il
lages
 t oremov etheregi
onali
mbal ancesinl endi
ng

Ki
ssanCr edi
tCards(1998-99)
Schemedesi gnedbyNABARD
Obj
ect
ives
 Topr ovi
deadequat eandtimelysupporttofar
mer
sinagr i
cul
tur
alacti
vit
iesby
banks..
 I tall
owsf armerst ocashfaci
li
ti
eswithoutgoi
ngthr
ought hecredi
tscreeni
ng
processrepeatedl
y.
 Repay mentofl oancanbereschedul
edinti
meofbadcropseasonandextensi
ons
areupto4y ears

Agricult
uralInsurance
CropInsurance
Cr
opi nsuranceisameansofpr otecti
ngt heagricul
tur
istagai
nstfi
nanci
all
osses
duetouncer tai
ntiesthatmayari
sefr om cropf ail
ures/
lossesari
singfr
om namedorall
unfor
eseenper i
lsbeyondthei
rcontr
ol.

Yi
eldbasedcropi nsur anceschemes
Fi
rstI
ndivi
dualAppr oachScheme1972- 1978
 Schemest artedf r
om 1972- 73wheni ntroducedaCr opInsur
anceSchemeonH- 4
cotton l aterincludedgroundnut,wheatandpot ato.
 Thisschemewasbasedon“ I
ndi
vi
dualAppr oach”
Pi
lotCropInsuranceScheme( PCIS)1979- 1984
 BasedonAr eaAppr oachf orprovi
di ngi nsurancecov eragai
nstadeclineincr
op
yiel
dbelowt hethreshol
dl evel.
 Theschemecov eredcereals,mil
l
ets,oi lseeds,cotton,pot
atoandchickpeaandit
wasconf inedt oloaneefarmer sofinst i
tutionalsourcesonav ol
unt
arybasis.

Compr
ehensi
veCropInsuranceScheme( CCI
S)1985-
99
 Thisschemewasl inkedt oshortter
m credi
tandi
mpl
ement
edbasedont
he
“homogenousareaappr oach
 CCISwascompul sor
yf orloaneef
armers

Nat
ionalAgr
icul
tur
alI
nsur
anceScheme(
NAI
S)1999
AO/
Economi
cs/Page20
 Thi
sschemei sav ailabletobothloaneesandnon-loanees.
I
tcover sallfoodgr ains,oil
seedsandannualhor t
icult
ural/commer ci
alcropsfor
whichpasty iel
ddat aar eavai
labl
ef oranadequatenumberofy ears.
.Thescheme
i
soper ati
ngont hebasi sofboth“ areaappr
oach”,forwidespreadcalamit
ies,and
“i
ndivi
dualapproach” ,f
orlocali
zedcal ami
ti
essuchashai lst
orm, l
andsli
de,
cy cl
one
andf l
oods.

Weat
herBasedCr opInsur ance/Rai nfal
lInsurance
 Weat herBased Cr op Insuranceai mst o mi
ti
gat
et hehardship oftheinsured
f
armersagai nstthel i
kel
ihoodoff i
nanci
allossonaccountofanti
cipat
edcroploss
r
esul
tingf r
om incidenceofadv erseconditi
onsofweatherparametersl
ikerai
nfal
l
,
t
emper atur
e,frost,humidit
y.
 VarshaBhi ma( 2004)
 Itoperatesont heconceptofAr eaAppr oach.

Modi
fi
edNAIS
 Theschemei nt
roducedt
ov i
l
lagepanchay
atlev
elorot
herequi
valentuni
tforal
l
majorcrops.
 Itoperatedpr
esentl
yCuddal
ore,NammakalandSiv
agangaidi
str
ictsofTamil
Nadu

AO/
Economi
cs/Page21
 I
NTRODUCTI
ONTOFARM MANAGEMENT
Farm-Fir
m
Far
m meansapi eceofl andwherecropandliv
est
ockent erprisesar
et akenup
underacommonmanagement .
Af ar
m isaf i
rm whichcombi nesresour
cesinthepr oductionofagr icul
tur
al
productsonthel
inesofabusinessfi
rm,i
.e.
,wit
htheobj
ect
iveofprofitmaximizati
on.
Definit
ion(
Bradf
ordandJohnson):
Farm managementisabranchofAgr icul
tur
alEconomicswhichdeal
swithweal
th
earningandweal t
hspendingactiv
iti
esoff ar
meri nrelat
iont
ot heorgani
zat
ionand
operati
onofindi
vi
dualf
arm uni
tforsecur
ingthemaximum possi
bleneti
ncome.

Obj
ect
ivesoftheFarm management :
 Toexami neproducti
onpat t
ernandr esourceuseoff
ir
m.
 Toi denti
fyfactor
sr esponsibl
ef orproductionanddetermi
netheopti
mali
tyof
resourceuse.
 Tos uggestwayandmeansi ngett
ingthepresentus
esofres
ourc
esoft
heopt
imal
it
yof
farm.
Farm managementdeci sion
Organi
zationalmanagementdeci si
on
Operati
onalmanagement
1.Whatt oproduce:Todeci deatbegi nningofev er
ycropseasonaboutthet
ypeof
farm producewi ththeavail
abl
er esources.
2.How t opr oduce:Todeci deaboutt he r esour
cecombinati
onconcernwit
hcost
mi ni
mi zat
ion
3.Howmucht opr oduce:Farmersdecideaboutt helev
eloff
arm out
puttoawit
hthe
availabler
esources
4.Whent oproduce? :Ti
mingofPr oducti
on
St
rat
egi
cmanagement
1.Deci
dingthebestsizeofthefarm
2.Deci
sionsonf armlabourandmachi neryprogr
ammes
3.Deci
sionsonconstructi
onofbui l
dings
4.Deci
sionsregardi
ngirri
gati
on,conservati
onandrecl
amat
ionpr
ogr
ammes
Administ
rativemanagementdeci si
on
1.Fi
nancingt heFar
m Business
a)Optimum Ut i
l
izat
ionofFunds
b)Acqui si
ti
onofFunds-ProperAgencyandTi
me
2.Supervi
sionofWor k–Oper at
ionalTi
ming
3.Accounti
ngandBookKeepi ng
4.Adjust
mentofFar mingBusinesstoGov er
nmentPr
ogr
ammesandPol
i
cies
Mar
ket
ingmanagementdeci
sion
Buy
ingofInput
s Sel
li
ngofOutput
Whatt
obuy WhattoSel
l
Whentobuy Whentosel
l

AO/
Economi
cs/Page22
 From whom t obuy Towhom tosell
Howt obuy Howt osel
l
Howmucht obuy Howmucht osell
Deci
sionmakingpr ocess
a. Tradi
ti
onalmet hod:Decisi
onisi
nfl
uencedbyt r
aditi
onsinthefamil
yorregi
onor
communi ty.
b.Technicalmet hod:Decisionsr
equir
et heuseoftechnical
knowledge
c. Economicmet hod:Alltheprobl
emsar econsideredinrelat
iontotheexpect
ed
costsandr eturns.

Rel
ati
onshipbet weenf arm managementandot hersci ences
 Far m managementr el
iescloselyonot herbr anchesofagr i
cult
uralsciencessuch
asagr onomy ,soilsci
ence,plantprotecti
onst udies, animalhusbandr y,agri
cult
ural
engineeri
ng, andforestry
 Thesephy sicalandbi ologi
calsciencesar enotdi rectl
yconcer nedwi t
heconomi c
eff
iciency.Theypr ovi
dei nput-
outputr el
ationshi psi nt hei
rr especti
vear easin
physicalterms,i .e.
,theydef ine production possi bi
li
ti
es wi t
hin which vari
ous
choicescanbemade.
 I ti
st hetaskoft hefarm managementspeci alistandagr icul
turaleconomistto
determinehowandt owhatext entthef i
ndingsoft hesesciencesshoul dbeused
i
nf arm businessmanagement .

Commonpr obl
emsi nthef i
eldoff arm management
 Smal lsi
zeoffarm business
 Farm asahousehol d
 Inadequatecapit
al
 Underempl oyment
 Slowadopt i
oninnovations
 InadequateofInputsuppl i
es
 Lackofmanager ialski
ll
 Lackofi nf
rast
ructuralfaci
li
ties

BASICCONCEPTSI NFARM MANAGEMENT

Resour
cesori nput sorf act
orsofpr oduct ion
Resour cesar et hosewhi chgetconsumedort ransf
ormedintoproduct
si nthe
pr
ocessofpr oduct i
on.Ser v
icesofr esour cesar eal
sousedupi ntheproduct
ionprocess.
Al
lagri
cultur
alresour cescanbecl assi f
iedi nt
ot wotypes.
i)Fixedr esources
ii
)Var i
abl eresources.
a)Fixedresour ces
 Fi xed ov era pr oduction-planning peri
od irr
espect
ive ofthe levelof
ent er
prisestakenup.
 The quant um off i
xed r esources does notchange wi ththe levelof
product i
on.
E.g.Land, buil
ding,machi neries,etc.
 Someoft heresources,whi char ef i
xedduringashortperi
od,maybecome
AO/
Economi
cs/Page23
 var
iabl
edur ingalongt er
m.
Eg:Implement sandmachi ner
ies
b)Var
iabler
esour ces:Varywiththelevelofout
put.
Eg:
Seed, fert
il
izer
,Labour
Resourcescanal sobeclassif
iedint
ostockandf
lowr
esour
ces.

- Stockresources
Resourcesthatcanbest or
edupf orusi
ngatl
aterperi
od.
Eg:Fert
il
izer
,seed,feed,et
c.
- Fl
owr esources:Resourcescannotbestor
edupforlateruse.

Productoroutput
I
tist
her esul
toftheuseofr
esour
cesorser
vicesofr
esour
ces.Ther
esour
cesget
tr
ansformedintowhatisknownasout
put.

 Transf or
mat i
onorPr oduct
ionPer i
od:Thet imer equiredf orar esour cet obe
compl etel
yt ransf or
medi nt
o apr oducti scal l
edt ransformat ionorpr oducti
on
per i
od.
 Tot alPhysicalPr oduct( TPP):TPPi sthequant um ofout put( Y)pr oducedbya
givenlevelofi nput(X) .
 Av eragePhy sicalPr oduct(APP):APPi st hequant i
tyofout putpr oducedperuni t
ofi nputi.
e.,ratiooft hetot
alproducttot hequant it
yofi nputusedi npr oducing
thatamountofpr oduct .
APP=Noofuni tofout put
/Noofuni tofInput
 Mar ginalPhy sicalPr oduct(MPP):Mar ginalphysicalproduct,t heref
or e,refer
st o
thechangei nout put
, whichresul
tsfrom applyi
nganaddi ti
onal unitofinput.
MPP=Changei nOut putΔY/Changei nI nputΔ

FACTOR-PRODUCTRELATI ONSHIP( OR)INPUT-OUTPUTRELATIONSHI P

Factor
-pr
oductr
elat
ionshi
pistodeter
minet heopt
imum quant
it
yofthevari
able
i
nputthatwil
lbeusedi
ncombi nat
ionwit
hf i
xedinputsi
nordert
oproduceopti
mal l
evel
ofout
put.

LawofDi mini
shingMargi
nalReturns(givenbyAl f
redMarshall)
Anincr
easei nl
abourandcapi talappli
edi nthecult
ivati
onofal andcauses,i
n
general
,alesst hanpr
oport
ionateincreaseint heamountofpr oducer
aised,unl
essi
t
happenstocoincidewi
thanimprovementi ntheartsofagr
icul
ture.

Thr
ee St
ages ofProduct
ion Functi
on (Rel
ati
onshi
p
bet
weenTotal
,Av
erageandMar gi
nalproduct
s)

St
ageI
 Start
swithori
ginendwithpoi
ntofAPP=MPP
 MPP at t
ains maximum pointcal
led infl
ect
ion
point
 TPPi ncr
easi
ngati ncr
easi
ngatincreasingupto

AO/
Economi
cs/Page24
 i
nfl
ectionpointandincr
easesatdecreasingrat
e
 El
asti
cityi
smor ethanoneAtendoft hest ageel
astici
tyi
sone
 The stage indi
cat
es techni
caleffi
ciencyofv ari
abl
ei nputand f
ixed i
nputi
s
i
ncreasing
 Thi
sst ageisregar
dsirr
ati
onalzone(subopt i
mal st
age).

St
ageI
I
 Start
swi t
hequalit
ypoi ntofAPP=MPPandendswi t
hMPP=0andt heTPPi
s
maximum.
 I
nt hi
sst ageMPPi slesst hanAPP
 TPPi ncreasesatdecreasingrateandMPPdecl i
ning
 El
asticit
yislessthanthroughoutthestageandendoftheZoneEp=0
 I
tindicatestheoptimum useofi nputwit
hmaximum output
 Thisstagei sr
egardsrationalzone(opti
malstage)

STAGEIII
 St art
swi t
hMPP=0
 MPPnegat i
veandEp=lessthanzero
 The st age indi
cat
es t
echnicaleffi
ciencyofvari
abl
ei nputand f
ixed i
nputi
s
decreasi
ng
 Thi sstageisregar
dsi
rr
ationalzone(supraopt
imalst
age)

Mar
ginalphy
sicalproductandav er
agephy
sical
product
MPP>APP, APPIncreasing
MPP<APP, APPDecr easing
MPP=APP, APPMaxi mum

Rel
ati
onshi
pbet
weenAPP,
MPPandEl
ast
ici
tyofPr
oduct
ion
Ep=MPP/APP

COSTSCONCEPTS
Productioncostspl ayanimport
antr
oleinthedeci
sionsofthefarmers.I
ngener al
,
atgivenl evelofpr i
ces,af armercanincr
easehisfarmincomei nt woway s,i.
e.,i)by
i
ncreasing pr oducti
onand/ori i
)byr educi
ngthecostofpr oducti
on.Sincecost
mini
mi zationisani ndiv
idualski
ll
,degr
eeofsuccessinthi
sdirect
iondirect
lyaddst othe
pr
ofit
soft hefarm.

Tot
alcost
TC=TFC+TVC=TFC+PxX
 Tot
alcostcompr
isesoftwocomponent
s,i
.e.
,fi
xedandv
ari
abl
ecost
s.
 TCincr
easeasoutputi
ncreases

Fi
xedCosts
 Fixedcost
sdonotchangeinmagnitudeast
heamountofout
putoft
hepr
oduct
ion
process
 Fixedcost
sar
eindependentofout
put.
AO/
Economi
cs/Page25
  Cashfixedcost
s:Landtaxes,r
ent,i
nsur
ancepremi
um
 Non-cashfi
xedcosts:Depreci
ati
onofbuil
ding,
machi
ner
iesandequi
pment
s

Vari
ableCosts
Vari
ablecostsar
ethosecost
s,whi
char
eincur
redontheemploy
mentofv
ari
abl
e
fact
orsofproduct
ionwhoseamountcanbeal
ter
edintheshor
trun

Averagefixedcost ,
Av er
agevari
abl
ecostandAver
agetotalcost
a.Averagef i
xedcost s
 Av eragefixedcosts,ar
ecomputedbydiv
idi
ngtotalfi
xedcost
sbyar
eamountof
output.
 AFCv ari
esdependingontheamountofpr
oduct
ion.
o AFC=TFC/ Y

b.Averagevariablecost
 Itiscomput edbydivi
dingt
otalvari
ablecostbytheamountofoutput.
 AVCv ari
esdependingontheamountofpr oduction.
AVC=TVC/ Y
c.Averagetotalcost
 Itcanbecomput edintwoways.Tot al
costscanbedi vi
dedbyoutputorAFCand
AVCcanbeadded.
AC=TC/Y
Marginalcost
 Itisdefinedasthechangeintot
al costperuni
tincreaseinout
put
MC=Changei nTC/ changeinoutput

Det
erminingtheOpt
imum usi
ngTot
alVal
uePr
oductandTot
alCost
s
Profi
t=TVP–TC=TVP–TVC–TFC=Py .Y–PxX–TFC

CostConcept
s
 Someoft hecostconcept
susedi
nfar
m managementstudi
esbytheCommi ssion
onAgri
cul
tur
alCostsandPri
ces(
CACP)ofGovernmentofIndi
aareA1,A2,B1,B2,
C1andC2,whi
char
edef
inedasf
oll
ows:

CostA1i
ncl udes:
 Valueofhumanl abour( casualandpermanent).
 Valueofbul l
ockpower( ownedandhi r
ed) .
 Valueofmachi nepower( ownedandhi red).
 Valueofseeds.
 Valueofmanur esandf erti
li
zer
s.
 Valueofpl antprotect
ionchemi cal
s.
 Valueofweedi ci
des.
 Irr
igationchar ges
 Landr evenueandt axes
 Depr ecationonf armimpl ementandmachi ner
ies
AO/
Economi
cs/Page26
  Interestonwor ki
ngcapi tal
CostA2=CostA1+Rentpai dforleasedinland.
CostB1=CostA1+I nt
erestont hev al
ueofownedcapi t
alasset
s( excl
udingl
and).
I
nterestrat
eofl ong-t erm gover
nmentf l
oatedl
oansorsecur i
ti
es:10percent
.
CostB2=CostB1+Rent alvalueofownedl and(l
esslandrevenue)andRentpai dfor
l
easedin  
  
  
  
  
  
  
  
  
 l
and.
CostC1=CostB1+I mputedv alueoffamilylabour
.
CostC2=CostB2+I mputedv alueoffamilylabour

I
ncomemeasur esinrelat
iont
odiffer
entcostconcepts
 Far
m Busi nessIncome=Gr ossReturn-CostA1.
 OwnedFar m BusinessI
ncome=Gr ossRetur
n-CostA2
 FamilyLabourIncome=Gr ossReturn-CostB2.
 NetIncome=Gr ossRet
urn-CostC2

Economicef f
ici
ency
 Economi ceff
iciencyref
erstothecombi
nat
ionsofi
nputst
hatmaxi
mizean
i
ndividual
’sobjecti
ves.
 Economi ceff
iciencyisdef
inedinter
msoft
woconditi
ons,
namely,
necessar
yand
suff
icient

Necessarycondit
ion
 Nopossi bi
l
ityofpr
oducingthesameamountofpr
oductwi
thf
eweri
nputs
(reduci
ngoneormor eresources
 Nopossi bi
l
ityofpr
oducingmor epr
oductwi
tht
hesameamountofi
npu

Suf
fici
entcondi
ti
on
Thesuffi
cientcondi
ti
onisoft
encall
edachoiceindi
cat
or.Thechoicei
ndi
cat
or
hel
psthemanagerdet ermi
neinput
-usecompat
ibl
ewi t
hhisobject
ives.

FACTOR-FACTOR( OR)INPUT- I
NPUTRELATI ONSHI P
 St udi
edthesituat
ionwhereonlyoneinputisvari
edandallothervar
iabl
esar
ehel
d
const
ant
I
soquant(or)I
soproductcurve
 Ani soquantisdefi
nedasthelocusofallcombinati
onsofinputs,
X1andX2
Perfectsubst i
tutes
Twoi nputsper f
ectlyi
nterchangeable
Perfectcompl ement s
Inputsthatincreaseout putonlywhencombi nedinfi
xedproport
ionsarecal
l
ed
technicalcompl ement s.
Leastcostcombi nation(minimizati
onofcost .
)
Tofi
ndoutacombi nati
onofi nputs,
whichshouldatl
eastcost
Thetangencyofi socostandi soquantwouldindi
cat
etheleastcostcombinat
ionof
X1andX2, i.e.sl
opeofisoquant=sl
opeofisocost
MRTSx1x2=changei
nX1/
changei
nX2=-
PX1/
PX2
AO/
Economi
cs/Page27
ECONOMI ESOFSCALE
Economi esofscalerefert otheadvantagesoflarge-
scaleproducti
on.
Inter
nalEconomi es
Internaleconomi esarethoseeconomi esinproducti
on(thosereducti
onsin
productioncost s),
whi choccuri nthefarmitsel
fwheni texpandsitsoutputorenl
arges
i
t sscal
eofpr oduction.
Fivetypes
a)Techni caleconomies, b)Managerialeconomies,c)Mar ket
ingeconomies,d)
Financi
al Economi es,ande)Ri skbear i
ngeconomi es

Exter
naleconomi es
Ext
ernaleconomiesarethoseeconomi
es,whi
char
eav
ail
abl
etoeachmember
fi
rm asaresultoftheexpansi
onoft hei
ndust
ryasawhol
e

Economiesofsize
Astudyoneconomi esofsizewouldbeuseful
toassesstheopti
mum si
zeoft
he
pl
ant.
PRODUCT- PRODUCTRELATIONSHI P
Product–productr
elat
ionshi
pdealswit
htheall
ocat
ionofresour
cesamong
di
ffer
entcropsandobject
ivei
spr of
itmaxi
mizati
on.
Producti
onpossi
bil
it
ycurve
Thepr
oduct
ionpossi
bil
i
tycurv
eorproductt
ransfor
mationcur
veisthelocusof
maximum amountsoftwoproduct
sthatcanbeproducedfrom agi
venquanti
tyof
resour
ces.
Rel
ati
onshi
p among pr oducts: The basi
c pr oduct r
elat
ionshi
ps can be: j
oint
,
compl
ementar
y,suppl
ementaryandcompetit
iveness.
Jointproduct s
 Pr oduct sresultfrom t hesamepr oducti
onpr ocess,combi
nedinfixedproport
ions
andt hepr oduct i
onofonewi thouttheot heri
simpossibl
e
 Nosubst i
tutionispossi bleinthiscase
E.g.Grainandst r
aw
Compet i
ti
vepr oduct s
Productsar etermedcompet i
ti
vewhent heoutputofoneproductcanbe
i
ncreasedonl ybyr educingt heout putoftheot herproduct
Compl ement arypr oducts
Twopr oduct sarecompl ement ary
,ifanincreaseinoneproductcausesan
i
ncreasei nthesecondpr oduct ,whent hetotalamountofinputsusedont hetwoareheld
constant
Supplement arypr oducts
Twopr oduct sarecal l
edsuppl ement ary
, i
ftheamountofonecanbei ncr
eased
wit
houti ncreasingordecr easingtheamountoft heother

Mar
ginalrat
eofproductsubsti
tuti
on
Themargi
nalrat
eofpr oductsubst
it
uti
onmeanst
her
ateofchangei
nquant
it
yof
AO/
Economi
cs/Page28
oneout
put(
Y1)asar
esul
tofuni
tincr
easei
ntheot
herout
put(
Y2)
Rev
enuemaxi
mizi
ngcombi
nat
ionofout
puts
MRPTofY2ofY1=changeinY1/
changei
nY2=Py
2/py
1
FARM PLANNI NGANDBUDGETI NG
Farm pl anni ngandbudget ingar et hemosti mpor tantt oolsoff arm business
analysi
s.Themostpr of i
tablealternativ
eent erpri
sesar esel ect edi ntheplanni
ngpr ocess
byorganizi ngtheav ai
lableland, l
abourandcapi talresourcesi ntopr opercombinati
on
Needoff arm pl an
Todesi r
eoft hef armert oattainhissetgoal andobj ectiv es
Budgeting
Inbudget ingpr ocessest imat ecostandr eturnsandnetpr ofi
toff ar
meror
part
icularent erprises.I tisusual l
ypr eparedforyearconsi der st her evenueand
expectati
ons.
Parti
albudget i
ng
Budget i
ngi sdoef orsingleent er
prisesort woent erprisesi tiscalledpart
ial
budgeting.
Advantages
1.Est i
mat i
onofeconomi cv i
abili
tyoft hefarm
2.Judgi ngther epay mentcapaci tyoft hefarmer
3.Reor ganizingt heresour cesandent erpri
sesf oramor tizingt hel oans
4.Assessmentofcr editrequirement s
5.Pr epar i
ngofcashf l
owst atement s
Farmf i
nanci almanagement
Goals
 Tomai nt ainliquidit
yt omeetcur rentacti
viti
es
 Tomaxi mi zespr ofi
t
Tool soff inancialmanagement
 Fundf lowanal ysis
 Rat i
oanal ysis
 Capi t
al budget i
ng

a)FUNDFLOW ANALYSI S
Balancesheetornetwor thst atement
 Measur efinancialper for
manceoft hefarm busi
nessduri
ngtheagricul
turaly
ear
 Fi nanci alpositi
onoft hefarm businessatparti
cul
arti
meshowi ngitsassets,
l
iabili
tiesandequi ty
 Ift heasseti smor et hanliabi
lit
iesiti
scall
edasnetwor t
horequity
Component sofbal ancesheet
1.Asset s–assetar ethosewhi chownedbyf armer
2.Liabil
ities–t her efertoal lt
hingswhi char
eownedt oothersbythefarmer
Currentasset s
 Ther ear ev eryli
qui dorshor tterm asset
stheycaneasil
yconvertedint
ocash
wi thi
nshor ttime.
Eg.St ockoff arm commodi ti
es
Int
ermedi ateorwor ki
ngasset
AO/
Economi
cs/Page29
  Theseasset st aketwoto5y earstoconver
tintocashf ar
m
Machi ner
y, l
i
vestock,t
ractor
s
Longter
m asset s
 Anassett hatisper manentorwillbeusedconti
nuouslyforsever
aly
ear
sis
calledlongt erm assets.
 I ttakesl ongert i
met oconverti
ntocashduetol egalt
ransact
ion
Eg: Farm buildings
Curr
entl
iabiliti
es
 Debtt hanmustbepai dintheshortorv er
ynearfuture.
Egcr opl oan,currentli
abil
it
ies

I
nter
mediat
eli
abil
it
ies
Thesel
oansaredueforr
epay
mentwi
thi
naper
iodoft
wot
o5y
ear
s

Longtermliabi
li
ti
es
Durat
ionofl
oanrepaymenti
sfi
veto10years
Egtr
actorl
oan,or
chardl
oan,l
anddev
elopmentl
oan

Incomestatementorpr
of i
torl
ossstatement
Incomest at
ementstheitemsincludear
er ecei
ptsexpensesgai
nandlosses.It
couldbedefinedasasummar yofreceipt
sandgainsminusexpensesandl
ossesduri
ng
aspecifi
edper i
od.Inincomest at
ementmonet aryval
uesar eassi
gnedtoinputand
output
.

Advant ages
Indicates t he t rend inv ari
ous costi t
ems and whet herhas been any over
expendi t
ureoft hef arm
Receipts
Themeanst her eturnsobt ai
nedf r
om sal
eofcr opproduct
.
Expenses
Oper ati
ngandf ixedl ostar ereducedar erecordedhere.Lossesinthefor
m of
depreciati
onont heassetv aluefallunderexpendit
ureitem
Cashf l
owst atement
 I tisknownascashf lowsummar yorcashflowbudgetorflowoffundstat
ement
 Cashf l
owst atementi sasummar yofcashinfl
owsandcashout fl
owsoffarmina
particularper i
od
 Cash f low st at ementpr epared att he begi
nning ofthe agri
cul
tur
alyearand
checkedev er yquar terl
y
Cashr eceipts
 Cashbal ance
 Tot al oper atingsales
 Tot al capital sales
 Nonf ar mi ncome
 Bor rowi ng
Cashexpenses
AO/
Economi
cs/Page30
  Operati
ngexpenses
 Capi
talinvest
ment
 Familyexpenses
 Paymentofpr ev
iousyeardebt
s
 Paymentofshor tt
ermloans

b)FI
NANCIALRATI OANALYSIS
Thefi
nancialr
ati
oanal
yseswoul
dusef
ult
oassesst
heper
for
manceoft
hef
arm
busi
ness.
Fi
nanci
alrati
o

) Netcapi
i talratio=Tot alAsset s/TotalLiabilit
ies
 Measur eofdegr eeoff inancialsafetyov eraper iodoft i
mebycompar i
ngt
he
pr
esentposi ti
onoft hebusi nesswi tht hatonsomepr eviousdate
 Highert herati
o, saf erwi llbetheposi t
ionoft hef armer.
i
i) Currentr atio=t otalcur rentasset s/ totalcur rentl iabi
li
ti
es
 Measur est heabi li
tyoft hefarmt omeeti tscur rentli
abili
ti
es
 Highert hecurrentr atio, thegreatert heshor tterm solvency.
i
i) Debt-Equi
i tyRat i
o=debt/owner sequi tyorNet wor th
Lowert hedebt ,thehi gherdegr eeofpr otectiont ocredit
ors
i
v) Equi ty/Val ueratio=NetWor t
h/TotalAssest s
Highert her ati
o,bet t
erwi llbethef i
nanci al positionoft hefarm busi
ness

c)CAPITALBUDGETI NG( I
NVESTMENTANALYSI S)
Itrefer
sl ongterm pl
anni
ngi nvolvi
ngthepr
oposedcapi
tal
outl
ayandplanni
ng
Useofcapitalbudget i
ng
 Expect edrateofeachproject
 I tenablest heinv
estmentspr oposalst
obetakenupwit
hsingl
epackage

i
) Timev al
ueofMoney
Futurevalueofpr esentmoney
t
A=P( 1+i)
i
i) Annuity
Account stheannual install
ment s
t
A=P( 1+i)- 1/i
i
ii
) Undi scountedmeasur es
Paybackperiod=I /E
I=i nvestmentoft hepr oject
E=annual netcashr ev enue
i
) DiscountedMeasur es
i
i) Netpresentwor th
Thepr esentwor thofthenetbenef i
tsofaprojectisobt
ainedbydeduct
ingcostsfr
om
thebenef i
tsandt heresulti
ngnetbenef i
tsar
edi scount
edatt heopportuni
tycostof
capi
talf
oreachy ear.

AO/
Economi
cs/Page31
 i
ii
) Costbenefitrat
io
I
tist
her
ati
obetweenthepr
esentwor
thofbenef
itandpr
esentwor
thofcost
s

i
v) I nternalr
ateofr
etur
n
Theint
ernalrat
eofret
urni
sdefinedasthatr
ateofdi
scountwhi chmakesthepr
esent
worthofbenefit
sandcostsequalorjustmakesthenetpresentwor t
hofthecashfl
ow
equalt
ozero.Thismeasurei
spopularl
yusedineconomi
candf inanci
alanal
ysi
s.

Far
m Ef f
iciencyMeasur es
Eff
ici
encyi sgenerall
ytakent omeant heout putinputratiowithoutanyconsi der
ati
on
oft
hequal ityei t
herofoutputorinputorbot h.
i) Cropy i
eldindex:Itisameasur ebywhi chthey ieldsofal lcropsonagi v
en
farm arecompar edwi ththeav er
agey i
eldsofthesecr opsint helocal
it
y.
ii) Syst em Index:Thisi ndexi susedf ordeterminingt her ational
it
ybywhi ch
variousenterpri
sesonacer tainfarm arecombi ned.
Sy stem Index=Pot ent
ialNetI ncomeperHaont heFar m*100
AverageSt andardNetI ncomeperHai ntheArea

i
ii
) I
ntensi
tyofCroppi
ng:Theint
ensi
tyofcr
oppi
ngmeasur
est
heext
entoft
heuse
ofl
andforcroppi
ngpurposesdur
ingagi
venyear

Cr
oppi
ngI
ntensi
ty=Gr
ossar
eacr
opped/
Netar
eacr
opped*
100

I
rr
igat
ioni
ntensi
ty=Gr
ossar
eai
rr
igat
ed/
Netar
eai
rr
igat
ed*
100

Br
eakEv enAnalysi
s
Totalcostcurve and t
otalrevenue curv
ei nter
sectis cal
led br
eakev
en poi
nt
i
ndicat
est hel
evelofpr
oducti
onatwhicht heproducernetherl
ossesmoneynormakesa
pr
ofit
Breakev
enpoi nt=[F/1-
V/P]
AO/
Economi
cs/Page32
 F–Fixedcost
P-Priceofcommodi t
y
V-Var i
abl
ecost
Margi
nofsaf et
y
Itindi
catest hediff
erencebetweentotaloutputandoutputatbreakevenpoi
ntor
t
otalr
ev enueobtainedfrom theent
erpri
sesandr evenueatBEP
MarginofSaf et
y= Totalrevenue–r evenueatbr
eakevenpoint
Percentofmar gi
nofsafety=Breakevenpoi nt/v
olumeofoutputx100

AO/
Economi
cs/Page33
 AGRI
CULTURALMARKETI
NG

 Mar ketingi sdef i

nedast hestudyofent i
regamutacti
vit
iesthatdir
ectt
heflowof
goodsandser vicesf rom t hepri
mar yproducert
oult
imateconsumer .
 Agr i
culturalmar ketingi st hest udyofal ltheacti
vi
ti
es,agenciesandpol i
cies
i
nv olvedi nt hepr ocur ementf ar
mi nputsbyt hefar
merandt hemov ementof
agr i
cultur
al product sfrom t hefar
mert otheconsumers
I
mport
anceofAgr iculturalMar ket i
ng
 Opt i
mi zat
ionofr esour ceuseandout putmanagement
 Increaseinf armi ncome
 Wi deningofmar ket s
 Growt hofagr o-basedi ndustri
es
 Wat chingt hepr i
cesi gnals
 Bet t
erlivi
ng
 CreationofUt il
i
ty

 For m ut i
li
ty:The pr ocessing f uncti
on adds f orm util
it
ybychangi ng the raw
mat eri
al i
ntof i
nishedpr oduct s.
Eg: Paddy- rice,Wheat- bread,biscuit
,cake,Milk-ghee.
 Placeut il
it
y :Thet ransportati
onf uncti
onaddspl aceutil
it
ytoproductsbyshif
ti
ng
them t oapl aceofneedf r
om t heplaceofpl enty
.
Eg.Pot at
oesi nplai
n, milkaturbanpl aces
 Timeut i
li
ty:Thest oragefunct i
onaddst imeutil
i
tytothepr oductsbymakingthem
av ai
lableatt hetimewhent heyar eneeded.
 Possessi onut il
ity:Themar ketingfunctionsbuyingandsel l
inghelpsi
nt he
transferofowner shipf r
om oneper sont oanotherinthemar keti
ngsystem.

Componentsofamar ket
 Theexistenceofagoodorcommodi tyf
ortr
ansacti
ons
 Exist
enceofbuy er
sandsellers.
 Businessrelat
ionshipori
ntercoursebet
weenbuyersandsel
l
ers
 Demar cati
onofar easuchaspl ace,r
egi
on,
countryort
hewholewor
ld

CLASSIFICATI ONOFMARKETS
Mar kets may be classif
ied on t he basis ofdimensions l
i
ke area,t
ime,
commodi t
ies,vol
umeandcompet i
ti
on.
1.Onthebasi sofarea
a)LocalorVi l
lagemarkets
 Buy i
ngandsel li
ngact i
vit
iesar econfinedamongt hebuyersandsell
ersdr
awn
from thesamev i
ll
ageornear byv i
ll
ages
 Thev i
ll
agemar ketexist
smost lyforperishabl
ecommoditi
es.
b)Regional mar ket
s:
 Buy ersandsel l
ersforacommodi tyaredr awnfrom al
ongerareathanthel
ocal
mar kets
 Regi onal mar
ketsinIndi
ausual l
yexistforfood

AO/
Economi
cs/Page34
c)Nati
onalmarkets:Amarketi
nwhi
chbuy
ersandsel
l
ersar
eatthenati
onall
evel
.
d)Worldmarket:Amarketi
nwhicht
hebuy
ersandsel
ler
sar
edrawnfrom t
hewhole
worl
d.

2.Onthebasi soft imespan

a)Shor tper i
odmar ket
 Themar kets,whi char ehel donlyf oraf ewhour swecal ledshor tper
iodmar ket
s.
 Thepr oduct sdeal twithi nthesemar ket sareofahi ghlyperishablenatur
e
Eg: Fish, Veget ables, Milkandf l
ower s.
b)Long- per i
odmar kets
 Ther emar ketsar ehel df oralongerper i
od.
 Thecommodi t
iest r
adedi nthesemar ketsarel essper i
shableandcanbest ored
forsomet ime.
 Thepr icesar egov ernedbot hbyt hesuppl yanddemandf orces.
Eg.Foodgr ainsandoi lseeds
c)Secular -mar ket s
 Thesear emar ket sofaper manentnat ure.
 Thecommodi tiest radedi nthesemar ket saredur ableinnatureandcanbest ored
formanyy ears.
Eg: Machi ner yandmanuf acturedgoods.
3.Onthebasi sofv olumeoft r
ansact i
ons
a)Whol eSal eMar kets
 Awhol esal emar keti sonei nwhichcommodi ti
esar eboughtandsol dinlargelots
ori nbul k.
 Tr ansact ioni nthesemar ketstakespl acemai nlybetweent raders.
b) RetailMar kets
 Ar etai
l mar keti sonei nwhi chcommodi ti
esareboughtandsol dt otheconsumer s
aspert heirrequi rement s.
 Tr ansact ionsi nt hesemar ketstakepl acebet weenr etai
ler
sandconsumer s.
 Thesemar ketsar ev eryneart otheconsumer s.

4.Onthebasi sofdegreeofcompet it
ion
a)Per
fectMar ket
s
 Ther earealargenumberofbuy ersandsel l
ers.
 Allthebuy er
sandsel l
ersi
nthemar kethaveperfectknowl
edgeofdemand,suppl
y
andpr i
ces.
 Thepr icesareuniform atany
oneplace,overperi
ods
Pri
cefi
xationinper f
ectmar ket
Marketpriceisdet er
minedbytheequi l
i
brium betweendemandandsupplyina
marketperiodofshor trun{MC=MR=AR}

b)I
mper f
ectmar ket
s
Themar ket
sinwhi chthecondi
ti
onsofper
fectcompet
it
ionar
elacki
ngar
e
char
acter
izedasi mperf
ectmarket
i.Monopolymar ket
 Thereisonlyonesell
erofacommodity.
AO/
Economi
cs/Page35
  Heexer cisessol econt rolov ert hequant i
tyorpriceoft hecommodi t
y.
E.g.Railway s.
 Pr icef i
xation: Condi tionst atest hatMC=MR<AR( Pr i
ce
i
i.Duopolymar ket
 Onl ytwosel lersofacommodi ty,
e. g.twor etailersinav il
lage.
i
ii
.Oli
gopol yMar ket
 Mor ethant wobutst il
laf ew sellersofacommodi tyist ermedasan
oli
gopol ymar ket .E.g.differentai rl
inesoper at
inginourcount ry.
i
v.Monopol isti
cCompet it
ion
 Lar genumberofsel lersdeal si nheterogeneousanddi fferenti
atedform ofa
commodi t
y .
E.g.TeaandCof feebydi fferentcompani es,pumpset s,fert
il
izersetc.
5.Basedonext entofpubl ici ntervention
a.Regulat edmar kets
 Mar ketsdot hebusi nessaccor dancewi thcert
ainrulesandr egulati
ons
 Mar ketcostar est andar dizedandpr act
icesareregulat ed
b.Unregul atedmar ket
 Mar ketsdot hebusi nesswi thoutr ulesandr egul
ations
 Tr ader sframet her ulesandr unt hemar ket

Character
isti
csofAgr i
culturalandHorticul
turalpr
oduce
Peri
shabil
ityofproduce:
 Mostoft hefarm pr oduceisperishableinnature,buttheperi
odofperishabi
l
ity
v
ariesfrom f
ewhour s(fl
owers)toafewmont hs(grai
ns)
 Theext entofperishabili
tyofthefarm producemayber educedbytheprocessi
ng
f
unctionbuttheycannotbemadenon- peri
shabl
elikemanufact
uredpr
oducts.

Seasonal i
tyofpr oduct i
on
 Tr aditi
onalv ari
et i
esar eseasonboundi nproductionbutt hehighy ieldi
ngvari
eti
es
arenott hatmuchseasonbound
Bulkinessofpr oduct s
 Thebul kychar act eri
sticofmostoff arm pr
oductsmakest heirtransportat
ionand
storagedifficultandexpensi ve.
 Thesei ncreaset hepr icespr ead.
Variati
oninqual ityofpr oduce
 Compar ed to manuf acture goods thereisl arge variati
on int he quali
ty of
agricult
uralpr oduct s,whi chmaket hei
rgradingandst andardizationsomewhat
diff
icult
.
I
rregularsuppl yofagr iculturalproduct s
 Thesuppl yofagr i
cul t
uralpr oductsisuncertai
nandi rregularbecauseoft he
dependenceofagr i
cultur
al producti
ononnaturalcondit
ions.
 Var y i
ngsuppl y
,t hedemandr emaini
ngalmostconst ant,thepr i
ceofagr i
cult
ural
producef l
uct uatessubst ant i
ally
.

Mar
ket
abl
esur
plusandmar
ket
edsur
plus
AO/
Economi
cs/Page36
Mar ket
abl eSurpl us
Themar ketabl esur pl usi st her esiduall eftwi tht hef armersaf termeeti
nghi s
familyconsumpt ion, f
ar mr equi rement s,
soci alandr eli
gionspay ments.
MS=P- C
MS=Mar ketableSur plus
P=Tot al Product ion, and
C=Tot al requirementoff ar mf amily
Factorsaf fecti
ngmar ket abl esur pl
us
 Si zeofhol ding
 Pr oductionofCommodi ty
 Pr i
ceoft heCommodi ty
 Si zeoff ami lyandRequi r
ement sofseedsandf eed
Mar ket
edSur pl
us
 Mar ketedsur plusi st hatquant i
tyoft hepr oduce, whi chthefarmeract ual
lysel
lsin
the mar ket,i rrespect ive ofhi sr equirement sf orf amily consumpt i
on,farm
requi r
ement s,soci al andr eli
giouspay ment s.
 Themar ket edsur plusmaybemor e,lessorequal tothemar ketablesurpl
us.
 Themar ket edsur plusi slesst hant hemar ketabl esur pl
uswhent hefarmerret
ains
someoft hesur pluspr oduce.
Keynote
Fordistresssal es-Mar ket edSur plus>Mar ket ableSur plus
Perishablegoods-Mar ket edSur plus=Mar ketableSur pl
us
Durablegoods-Mar ketedSur plus<Mar ketabl eSur plus

Approachest otheStudyofAgricult
uralMar keti
ng
Functi
onalapproach
 Amar ket
ingfuncti
onisanact ,operati
ononser vicebywhi chtheorigi
nalproducer
andt hef inalconsumerar elinkedpr oducerandt hefinalconsumerar elinked
together.
 Thismet hodanal y
sesindetailthespecifi
cfunctionsofmar keti
ngsuchasbuy ing,
sell
ing,tr
ansportati
on,
storage,standardiz
ation,
gr ading,
financing,
risktaki
ng

AO/
Economi
cs/Page37
I
nst
it
utionalApproach
 Thei nsti
tut
ionalapproachtost
udyofmar
ket
ingprobl
emsimpli
esastudyof
agenciesandinsti
tut
ions,whi
chper
for
mvari
ousfunct
ionsi
nthemarketi
ng
process.

Commodi tyAppr oach

Undert hisapproach, t
hecommodi t
yist hepivotaroundwhichalli
nstit
utionaland
functionaldetail
sar estudied.
Behav
ioralSystem Appr oach
 Thi sappr oach referst ot he st
udyofbehav iouroff i
rms,instit
utionsand
organizati
ons, whichex istint
hemar ket
ingsy st
em fordi
ffer
entcommodi ties.
 The mar keti
ng pr ocess i s conti
nually changing inits organization and
functionalcombi nations.Anunder standingoft hebehavi
ouroft heindi vi
duals
i
sessent i
alifchangesi nt hebehaviourandf uncti
oningofthesystem ar etobe
predicted.

TRANSPORTATION
 I
tisanecessar yfunct ionofmar keti
ngbecauset hemostoft hemar ketsar e
geogr
aphicallysepar atedfrom t heareasofpr oduction.
 I
tenhancest heeconomi cvaluet hr
ough. creati
onofpl aceutili
ty.
 Theimportantf unct i
onoft r
anspor tis
- I thel psi nt hegr owt hofi ndustri
eswhosepr oduct srequirequi ck
mar ket inge. g.veget ables,fl
ower s,milkandf i
sh.
- I ti
ncr easest hedemandf orgoodst hroughwi deningofmar ket
- I tcr eatespl aceut ili
tyandt ransportati
onbr i
dgest hegapbet ween
product ionandconsumpt ioncent r
es..
- I thel ps i n st abil
izat i
on ofpr i
ces bymov i
ng commodi ties from
surpl usar eat odef icitarea.
- I tenabl est oconsumer st oenjoyt hebenef itsofmanygoodsnot
producedl ocally
.
- Tr anspor ti ntensif
iescompet i
ti
on,whi ch,int ur
n,r educespr ices.
Pricesar eal soreducedbecauseoft hef aci
li
tiesofferedbyt ransport
forlar ge- scal eproduct i
on

AO/
Economi
cs/Page38
STORAGE
 St or
ageisani mport
antmarketi
ngfunct
ion,whichinvol
veshol
dingandpr eser
v i
ng
goodsfr
om theti
met heyar
eproduceduntil
theyareneededf
orconsumption.
 St or
ingt
ransport
ati
onisImpossi
bleandstori
ngismadepossibl
ebytransportat
ion.

Improvedgr ainst oragest ructures

1.Smal lscal est oragest ructures
a)PAUbi n
Galv anizedi ronst ructurewhosecapaci tyrangesf rom 1.5to15quintals.
I
tisdev elopedbyPunj abAgr i
cult
ur alUniversi
ty,Ludhiana.
b)PUSAbi n
Madeofmudorbr i
ckswi t
hapol ythenef il
m embeddedwi t
hint
hewal l
s.
I
tisdev el
opedbyI ARI, NewDel hi
.
c)HapurTekka
DevelopedbyI ndianGr ainSt or
ageI nstit
ute,Hapur .
I
tisacy li
ndr icalrubber i
zedcl ot
hst r
ucturesuppor t
edbybamboopol esonamet al
tubebase,andhasasmal lhol eint hebot t
om t hroughwhichgr ainscanbe
remov ed.
2.ForLar geScal eSt orage
1.CAPst or age
I
twasdev elopedbyFoodCor por at
ionofI ndia.
I
ti nvolvesconst r
uctionofbr i
ckpi l
lars,toahei ghtof14"f r
om groundwi t
hgroves
i
nwhi chwoodencr aftsarefixedf orstackingofbagsoff oodgr ains.
Thewhol euni ti
scov eredwithat hickpolythenesheet .
2.War ehouse:I thasbeencr eatedbyFCI ,CWC,SWCandCo- oper ativ
eMar ket
ing
organi zation.

For
mulatocalculat
emar ginofstorage
Netret
urnsfrom stor
age=( Pt-
P0)-C
Ms=[ (
Pt-
P0)/(P0+C)]
*100

WAREHOUSI NG
Warehouses ar e sci
enti
fi
c st
orage st
ructur
es speci
all
y const
ruct
ed f
ort
he
pr
otecti
onofquant i
tyandquali
tyofst
oredpr
oducts.
I
mpor tantfuncti
onsare
Scienti
ficstorage
Financing
PriceStabili
zati
on
Mar ketIntel
li
gence

AO/
Economi
cs/Page39
Ty
pesofWar ehouses
GeneralWarehouses
Special
commodi tyWarehouses
Refr
igerat
edwarehouses

War ehousingi nI ndia

1.National co- oper
ativeDev elopmentandWar ehousingBoard(1956)
2.Central War ehousingCor por at
ion(1957)
3.StateWar ehousingCor por ati
on
4.FoodCor por ati
onofI ndia
5.Co-oper at iveSector
RuralGodowns
TheGov ernmentofI ndialaunchedaschemef ortheestabli
shmentofNat i
onalGri
dof
Rural Godowns( NGRG)i nJuly1979.
Specifi
cobj ect ives
 Pr event ionofdi stresssal eoff oodgrainsandot heragricul
tur
alcommodi ti
es
immedi at elyaft
erhar vest.
 Reduct ioni nquantit
yandqual ityl
ossari
singatpr esentduetounscient
ifi
cstor
age
byfanner s.
 Reduct ioni npressureont ransportsyst
em int hepostharvestperi
od.Creati
onof
empl oymentoppor tuniti
esi nruralar
eas.
 Hel pingt hef annersinget ti
ngl oansagai
nststor edproduct
s.

GRADING
 Sor t
ingoft heunl ikelotsoft hepr oducei ntodif
ferentlotsaccor di ngt othequalit
y
speci ficationsl ai ddown. .
 I tisasub- funct ionofst andar di
zation.
Advantagesofgr adi ng
 Gr adi ngbef or esal eenabl efarmer stogetahi gherpr i
cefort hei rpr oduce.
 Gr adi ngf aci l
itatesmar keti
ng
 Gr adi ngwi densmar ket ,withoutinspect i
onthesal ecanbeef f ectedov erphone
atdi stantpl aces.
 Gr adi nghel psconsumer stogetst andardqualityproductsatf airpr iceshops.
 Gr adi ngcont ri
but est omar ketcompet it
ionandpr ici
ngef f
icienci es.
MarketI nformat ion
Mar keti nf ormat ionmaybebr oadlydef i
nedasacommuni cationorr ecepti
onof
knowl edgeori ntelli
gence.
Mar keti nf ormat ioni susef ult oallt hesect ionsoft hesoci ety- Far mer ,Producer,
Mi ddlemen, Gener alEconomy ,andgov ernment .
Twoty pesofMar keti nformat ion
Marketi ntelli
gence
Thisi ncludesi nf ormat i
onr elati
ngt osuchf actsast hepricesthatpr ev ail
edi nthepast
andmar ketar rivalsov ertime.
Itishi stor i
cal nat ure.Ananal ysisofthepasthel pstotakedecisionaboutt hef ut
ure.
MarketNews
AO/
Economi
cs/Page40
 Thi ster mr efer st ocur renti nf ormat ionaboutpr i
ces, arri
valandchangesi nt hemar ket
condi tions.
Theav ailabi li
tyofmar ketnewsi nt i
meandwi thspeedi sofut mostv alue
Mar ketingef ficiency
Thet erm mar ket ingef ficiencyr ef erst ot heef fecti
v enessorcompet encewi thwhi cha
mar ketst ruct ureper formsi tsdesi gnat edf unct i
on
Twot ypesofMar ket ingEf ficiency
Techni calEf fi
ci ency:Ef fi
ci encyi ssai dt ohav ei ncreasedwhencosti sr educedf or
performi ngaf unct i
onf oreachuni tofout put
PricingEf ficiency: Pricingef f
iciencymeanst hatthesy stem isablet oallocat ef arm
product sei therov ert ime, acr osst hespaceoramongt het r
aders,processor sand
consumer s
Mar ketingCost s
Thecosti nv olv edi nmov i
ngt hepr oductf r
om t hepoi ntofproduct iont ot hepoi ntof
consumpt ion
PriceSpr ead
 Thedi fferencebet weent hepr icepai dbyt heconsumerandt hepr icer eceived
byt hepr oducerandt er medasmar ketmar gi
n
Mar ketI ntegr at i
on
 I ti s a pr ocess whi ch r eferst ot he expansi on off i
rms byconsol idati
ng
addi tional mar ket ingf unctionsandact i
viti
esunderasi nglemanagement
1)Hor izont alI nt egr ation
 Mar ket i
ngagenci escombi net of orm auni ont or educet heiref fectivenumber
andt heext entofact ual compet i
ti
oni nt hemar ket.
e. g.Pr i
mar ymi l
kpr oducer scooper ativesoci ety.
2)Ver tical i
nt egr at ion
 Twoormor ef unct ionsi nt hemar ket i
ngpr ocesswi t
hi nasi nglef irm orundera
singl eowner shi p.
e.g.ifaf ir
m assumeswhol esal easwel lasr etail
ing,itisav erti
calint egrationorr i
ce
pr ocessorundert akingr etaili
ng.
3)Congl omer at ion
 Acombi nationofagenci esoract i
v i
ti
esnotdi r
ectlyrelatedtoeachot hermay
oper at eunderauni fiedmanagement .
Cl ot handGener al Mi lls{clothandv anaspat hi).

Rol
eofGov ernmentinPr omotingAgri
cultur
alMarketi
ng
Establ
ishmentofDirectorat
eofMar keti
ngandInspect
ion;
HQ:
Del
hi
Functi
ons:
 Mar ketr
esearchandcommodi tysurv
ey
 Promot i
onofGr adingandStandardi
zati
on

AGMARKLabor ator
y-Nagpur
Functi
on: Certi
fyi
ngAgr icul
tur
alCommoditi
es
Nat
ionalI
nstit
uteofAgr icult
uralMarketi
ng(1988)
Locati
on: Jaipur
Functi
ons :Mar ketr esearch act
ivi
ti
es and t
rai
ning act
ivi
ti
es r
elat
ed mar
ketof
agri
cult
uralcommodi tyt ofarmers
AO/
Economi
cs/Page41
Commodi
tyBoards
i) TobaccoBor ad-1975(Guntur
)
Regul at
ingandcur i
ngofTobacco
Expor tPromotion
ii
) SpicesBoar d(Cochin)
LinkbetweenIndianproducer
sandImpor
ter
s
ii
i)CoffeeBoar d(Chi
ckmangal or
e)-1940
Salespromot i
onofCof f
eeinDomesti
c

MARKETINGI NSTI TUTI ONS

Somei mpor t
anti nsti
tut i
onsinthef i
eldofagr i
culturalmarketi
ngar e:
St
ateTradingCor poration( STC)
 St artedi n1957under t
akesst atetr
ading
 Itmai nf unct i
on i s explore new mar ket s,under t
ake i mportand int
ernal
dist
ributionofcommodi t
iesandpr omot elongt erm exportoperati
on.
 Tomakeav ailablesuppliesofessent i
alcommodi ti
est oconsumer sat
reasonabl epr i
cesonr egularbasis.
 Toensur eaf airpr i
cetothef armerssot hattheremaybeanadequat e
i
ncent ivetoi ncr easeproduction.
 Tomi nimi zev iolentpri
cefluctuati
onsoccur ringasar esultofseasonal
vari
at i
onsi nsuppl yanddemand.
 Toar rangef ort hesuppl yofsuchi nputsasf erti
li
zer
sandi nsect
ici
dessothat
thetempoofi ncr easedproduct i
onismai ntained

TheFoodCorporationofI ndi
a.
 Establ
ishedi n1965
 Anef fi
cientmanagementofthefoodeconomywi thavi
ew t
oensuri
ngan
equit
abledi str
ibuti
onoff
oodgrai
nsatreasonabl
epri
cestothev
ulnerabl
e
secti
onsofsoci ety

TheNati
onalAgr iculturalCo- operati
veMar ketingFeder ation(NAFED) .(1958)
 NAFEDi sanapexor ganizat
ionincooper ati
v emar keti
ngandpl ayanimpor
tant
roleinst abili
zingt hepr i
ceofper i
shabl ecommodi t
iesli
keoni onandpotat
o
 Itpromot einterstateandexpor ttr adeoff arm produce
 Headof fice: Delhi
Act
ivi
ti
esofNAFED
 Foreignt rade- Expor tandImpor tofAgr iculturalcommodi t
ies.
 PriceSuppor toper ation.
 Product ionandMar ket i
ngofagricul t
uralinputs.
 Promot i
onal act i
viti
es.
 Dev elopingCo- operativemarketingofTr i
bal produce.
 Settingofsci ent i
ficst or
agesystem.
 Processi ngofFr uitsandVeget abl es

Cot
tonCorporat
ionofIndia(CCI
)&Jut
eCor
por
ati
onofI
ndi
a(JCI
)
 Establ
ishment:1971
AO/
Economi
cs/Page42
  Funct
ionunderthemini
str
yofCommerce
 Undertakecot
tonandjut
eprocur
ementt
hroughouti
ndi
a

Nat
ionalDai
ryDev elopmentBoard(NDDB).
 Establ
ishmentin1965locatedatAnand
 Dairydev el
opmentacti
vit
iesandencour
agest
hedai
rycooper
ati
ves
Agr
icul
tur
ePr ocessedfoodProductsExportDev el
opmentAgency( APEDA) .
 Existencein1986funct
ionunderthemi nistr
yofCommer ce
 Aut onomousbodyt opr omotelinkagebet weenI ndi
anpr oducers/ expor
ter
s
andglobalmarket
s
 I tf
ormulatet
heschemesf ori
nfrastruct
ureupgr adati
onorimpr ovetechnol
ogy
ofpacking
TANFED–Tami lNaduAgr i
cul
tur
alCooperat i
veMar keti
ngFederation
Apexmar keti
nginst
it
uti
onatstat
elev elperf
ormssi mil
arfuncti
onslikeNAFED

RegulatedMar kets
Marketsinwhi chbusinessisdonei naccordancewi t
ht herulesandregul
ati
ons
fr
amedbyt hest at
utorymarketorgani
zati
onandr epresentdi
fferentsect
ionsi
nvol
vedin
markets.
Basi
cobj ect
ive: El
iminat
ionofmalpract
ices

Co-operati
veMar ket s
Acooper ati
vesalesassoci ati
oni sav oluntarybusinessorganizationestabl
ishedbyits
memberpat r
onst omar ketfarm productscol l
ectiv
elyfort
heirdirectbenefi
t.
Functi
on
1)Tomar kett
hepr oduceoft hemember soft hesocietyatfairprices
2)Tosaf eguardt hemember sf rom excessi v
emar keti
ngcost sandmal practi
ces.
3)Tomakecr editfaci
li
ti
esav ai
l
abl etot hemember sagai nstt hesecurit
yoft he
producebroughtf orsal
e.
4)Tomakear rangement sforthesci enti
ficstorage

St
ructur
eofCo- operat
iveMarkets
Twotierstruct
ure Threetierst
ructur
e
St
atelevel
mar keti
ngFederat
ion St
atelev
el market
ingFeder
ati
on

Pri
mar yco-operat
ivemar
ket
ing Di
str
ictmar
ket
ingsoci
eti
es
(Di
str
ict)
Soci
eties(TalukLevel
)

Pr
imar
y Cooper
ati
ve mar
ket
ing soci
eti
es
(Tal
uk)
Note:Tami
lnadu–TwoTi
erSt
ruct
ure
Buf
ferSt
ock
AO/
Economi
cs/Page43
 Theterm buff
erstockoff
oodgrainsr
efer
stothestockoff
oodgr ai
nsmaintained
bythegov er
nmentt obeusedasabuf f
ertocushi
ontheshocksoffluct
uat
ingsupplyand
pri
ce,tomeett heemergencyneedsandtomeetthesit
uati
onsari
singoutofseri
ous
unexpectedshortages.

AGRI
CULTURALPRI
CEPOLI
CY
Pr
iceFixati
on
 Thepr i
cefi
xati
oni sunder
takenbyt hegov er
nmentsuchthattheproduct
ive
resourcesarechannel
edint
opr oducti
onofr equi
redfoodcommodit
iesandal
so
generatesenoughincomet ofarmer sfordecentliv
ingandprov
ideforcapi
tal
formationi
nagri
cult
ureforf
utureproduct
ion.

Commi ssionforAgr icul

turalCost sandPr ices
 Toadv i
cet hegov ernmentt of i
xmi nimum suppor tpr
icesandprocurementpri
ces
theAgr i
cultur
alPr icescommi ssionwassetupi n1965andl aterrenamedas
commi ssi
onf orAgr icult
uralCostsandPr ices(CACP)i n1985
 TheCommi ssionrecommendedt woset sofpr ices,mini
mum supportpri
cesand
procurementpr i
ces.
NeedofAgr icult
uralPr i
cePol i
cy
 Saf eguar dfarmeri nterestandgivingi ncentivestoaugmentofagr i
cul
turalpr
oduct
 Ef fecti
v edi
st r
ibuti
onofcommodi tiesatf airpri
ces

ADMINISTEDPRICES
1.Pr
ocurementPri
ce:I
tist
hepr
icesgov
ernmentpr
ocur
escommodi
ti
esf
rom f
armer
s

2.Ceil
ingPri
ce:I
tistheupperpri
celev
elofcommodi
tyf
ixedbyt
hegov
ernmentt
o
prot
ectconsumerfrom unwarr
antedpri
ceri
se

3.Minimum SupportPri
ces:Mainl
yaimedt oprot
ectthefar
mersagai
nstt
hepri
cefal
l.I
t
announcedbyev er
yagri
cul
tur
alseasons
Pr
iceFixat
ion:Basedontheaveragecostofproduct
ionusi
ngthesi
xcostmeasur
es

MSPf
ormaj orcropson(
25-10-
2011)
 Paddycommon– 1080perQui ntal
 Paddygrade-A– 1110perQuintal
 Maize- 980perQuintal
 Wheat– 1285perQui ntal
 Cott
on- 2800perQui ntal
 Copra– 4525perQui nt
al
 Sugarcane–1675pertone

AO/
Economi
cs/Page44
 AGRI
CULTURALEXPORTS
Externaltr ade
Mar ket i
ngagr icult
ur alcommodi tyacrosst henati
onalbordersandgeneratesforeign
exchangeear ningswhi chhelptoincreasesthecountryimportcapaci
ty.
BroadCat egor i
esonI ndianAgr i
cult
uralExports
Rawpr oduct s
Semi r awpr oduct s
Processedandr eadypr oducts
MajorAgr icommodi t
iesexpor tfrom I
ndia
Basmat hiandnonBasamat hiri
ce
Pulses
Spices
Cashew
Oil
cakes
Tabacco
Tea
Coffee
MangoPul pandFreshMangoes
CutFl ower s
ProcessedSugar
ProcessedandRawCot ton
ExportPol icy
Expor tpr ofi
tfrom agr icul
tur
alcommodi tiesexemptfrom incometax
Inputsr equi
redt obei mpor t
edforexpor tproduct
ionareexemptf rom basiccustom
dut y

Exportpr omotionagenciesf
orAgr i
cul
turalCommodit
ies
Ministryoffoodprocessi
ngindustr
ies
Foreigninvestmentpromoti
onboard
APEDA
MIPEDA
Commodi t
yboar ds– Rubberboar d,Spi
cesboar
d,Cent
ralsi
l
kboar
d,Teaboar
d,
cof f
eeboard,Tobaccoboard

Internati
onal Polici
esRel atedAgr i
cul
ture
Gl
obalizat
ion
Itinvolvesi ncreasingi nteracti
onamongt hemembercount ri
esintermsoft r
ade,
Mobi li
tyoff actors,freef low oft echnologyandspr eadi
ngknowledget hroughout
thewor l
d
Li
beral
izati
on
Relaxati
onofpr eviousgov ernmentr estri
cti
onsint hear easofsoci
oeconomi cpolices
toincreaset hei nvestmentf l
ows.
Pr
ivati
zati
on
Transfert heasset sorser vi
cef unct i
onsf rom publ i
ct opri
vat
eowner shi
pwi t
ht he
condi t
ionofwor ki
ngofsoci alandeconomi cdev el
opmentinthecountry
Themai nobj ecti
veofpr ivati
zati
oni smor ecompet iv
eness,t
imelyandqual i
tyoutput

AO/
Economi
cs/Page45
 wi
thoutpol
i
tical
int
erf
erence

Organizat ionf orFaci li

tat i
ngGl obalization
WORLDTRADEORGANI ZATI ON
Exist encei n1stJanuar yof1995, Power fulbodybr oadai msatmaki ngwhol ewor l
das
bigv il
lagewher et her ei sf reeflowofgoodsandser viceswi thoutbar ri
er soft rade
Funct ions
Handl ingt radedi sput es
Moni tort radeoft hemembercount r
ies
I
mpactofWTOi nI ndi anAgr i
cul ture
Thet ot alagr icultur alexpor tsf r
om I ndi aincr easef rom $4367mi lli
oni n1994- 95t o
$7500mi lli
oni n2010- 11.
Agr i
cul t
ur eexpor thassi zeabl eshar eofabout10- 15%i nt otal expor tsoft hecount ry
Because oft he r emov alofQuant it
at i
ve Rest ri
cti
ons ( QR’ s)on i mpor t
s,I ndian
consumer sar eex pect edt ogetbet terchoi ceofpr oduct s( Qual i
typr oduct s)atl ow
prices
Freet radewoul dbr ingaboutsi gnifi
canti ncr easei nov erallpr oduct ivityofagr icul t
ur e
thr oughmor eef fi
ciental locationofr esour ces
WTOagr eement sr elat edt oAgr icult
ur e
AgreementonAgr i
cul ture
TheAgr eementonAgr i
cul turef ormswassi gnedbyt hemembercount riesi nApr i
l
1994atMar rakesh, Mor occoandcamei ntofor ceon1stJanuar y, 1995.
TheUr uguayRoundmar kedasi gnifi
cantt urningpoi ntinwor l
dt radei nagr icultur e
AOAI mpact s
TheAoA i si mpor tantbecausei thel psl evelt hepl ay i
ngf ieldf oral lpar ticipating
member sbyel imi nat i
ngorr educi ngsomeunf airtr
adeandsuppor tpract i
cesused
bymanycount riesint hepast .
Ar ev iew oft heconcept sofcompar ativeadv antageandcompet i
tiveadv ant agewi l
l
hel pusunder st andwhyt radei si mpor tantandhow gov er nment scani nf l
uence
tradet hr oughpol ici
es.
Tradedi st ortingsuppor tofagr i
cultur ebyweal t
hynat i
onswast hemai ni mpet usf or
dev elopmentoft heAoA.
Sali
entf eat ur es
The obl igat ions and di sci plines incor por ated i nt he Agr eementon Agr iculture,
ther ef ore,r elatet o( a)mar ketaccess( b)domest i
csubsi dyordomest i
csuppor t
;
and( c)expor tsubsi dy
Mar ketAccess
Onmar ketaccess, theAgr eementhast wobasi cel ement s:
Tari
f f
icat ion
Tarifficat ionpr ocesst oget herwi thot hert arif
fsonagr icult
ur alpr oduct s,ar et obe
reducedby36%ov eri n6y earsi nt hecaseofdev elopedcount riesand24%i n10
year sint hecaseofdev elopingcount ries.
Maxi mum t ar i
ffsonpr imar yagr i
culturalpr oduct sat100%;pr ocessedf oodsat150%;
andedi bleoi l
sat300%.

i
i
)Mini
mum l
evelf
orimpor
tsofagr
icul
tur
alpr
oduct
s:
Membercount
ri
esasashar eofdomest i
cconsumpt
ionbymi
nimum i
mpor
tog
AO/
Economi
cs/Page46
 agri
cul
tur
al commodi ti
es
Domesti
cSupport
Provi
sionsoftheAgr eementregardingdomesti
csupporthavet
womai
nobj
ect
ives
Ident
if
yacceptabl emeasuresthatsupportf
armers,
todenyunaccept abl
e,tr
adedistort
ingsupportt
othefar
mer s

Expor
tSubsi di
es
Pr
ov i
deSubsidi
est oexpor
ter
si nreduct
ionofexpor
tmar
ket
ingcost
s,i
nter
naland
inter
nati
onalt
ranspor
tandfrei
ghtcharges

Threeboxmeasur esr elat

edtosubsi
dies
GreenBox
Nonedistor
ti
ngint ermsofproduct
ionandtradedirecti
ncomesuppor tUnl
inkedt
o
pr
oducti
onssav ingenvi
ronment.
Bl
ueBox
Lesstr
adedistort
ingbecausewhitethedir
ectl
yli
nkspr oducti
ontosubsidi
es
AmberBox
Mosttradedist
orti
ng, pr
imari
l
ybyencouragingexcessiveproduct
ions

Sanit
aryandPhy tosanitaryMeasures
SPSmeasur esdeal withfoodsafet yandani malandplantheal t
hst andards.
TheSPSagr eementai mst oprotecthuman, ani
mal andpl antlif
eandheal t
hfrom pestsand
diseasesar isingoutofimpor tsoff oodandagr icul
turalpr oducts.
Her e,microbial, t
oxicandphy si
cal contaminantsshouldbewi thinther angespecifiedby
codex
Thesear er egul ati
onsont r
adeinf oodst uff
sandf eedandot hernat uralproductstoprotect
human, animal andplanthealthi ntheimportingcount r
y.
TheWTOdoesnotsett hestandar dsbutt heSPSagr eementencour agesmembercount riest
o
usest andar dssetbyinternati
onal organizat
ionsort osett heirownst andards.

Techni
calBarr
ierstoTrade
 Measuresrefertoal
lpr
oductsincl
udi
ngfoodproduct
s.agr
icul
turalpr
oduct
s.
 Ontheot herhand,t
heTBTagr eementdealswit
hproductspecifi
cat
ionssuchas
si
ze,shape,weightand packagingmater
ialr
equir
ementsincludi
nglabel
ingand
handl
ingsafety

Tr
adeRel at
edInvestmentMeasur
es
Itappli
esonlytomeasurest
hataf
fectt
radeingoods.
Itrecogni
zesthatcert
ainmeasur
escanr estr
ictanddist
ortt
rade,andstat
est
hatno
membershal lappl
yanymeasurethatdiscri
minat
esagainstforei
gner
sorf
orei
gn
product
s

TRI
PS(Traderel
atedintel
lectualpr
opertyrights)
 Ideasandknowl edgear eanincreasingl
yimpor tantpartoftrade.
 Mostoft hevalueofnewmedi cinesandot herhightechnologyproductsli
esinthe
amountofi nventi
on,innovat
ion,research,designandt est
inginvol
ved.
 Creator
scanbegi vent herightt opr eventot her
sf rom usingtheirinvent
ions,
AO/
Economi
cs/Page47
 desi
gnsorothercreat
ions.
 Theser
ight
sar eknownas“ I
ntel
l
ect
ual
Proper
tyRi
ght
s”.

AO/
Economi
cs/Page48
 LEGALLAWSRELATEDTOAGRI CULTURE
Pr
eventi
onofFoodAdul
terat
ionAct-1995
Emphasisgoodmanufact
uri
ngpracti
cesi
nthepr
ocessofagr
icul
tur
alcommodi
ti
es
wit
houtf
orei
gnmatter
s

Agr
icul
tureproduceact(
Gradi
ng&Mar ki
ng)
Certi
fi
cati
onofAGMARKonv ol
unt
arybasi
sofsomepr
ocessedagr
icul
tur
al
commodi t
ies

ESSENTIALCOMMODI TOESACT
Frui
tProducti
on&Cont r
olOr der(1995)
Ai
msi nregulat
ingsanit
aryandhy gieni
ccondi
ti
onsoffr
uitandveget
abl
epr
oduct
s
Mandatoryforall
manuf acturedoffrui
tsandv
eget
ableproduct
Order
edimpl ementedbyMOFI

MeatFoodProduct
sOr der(
1973)
Itemphasi
stheli
mitofheavymetal
s,pr
eser
vat
ivesandr
esi
dues
Order
edbyMi ni
str
yofRuralDev
elopment

Mi
lk&Mi l
kProductOrder(1992)
Admi ni
ster
edbyt hedeptofAnimalHusbandr
y&dai
ry
Itensuresproducti
onandsupplyofmil
kandmi l
kpr
oduct
sthr
oughoutt
hecount
ry

AO/
Economi
cs/Page49
 ECONOMI
CSI
I
INSTITUTIONS
INTERNATIONALEVENTS&I MPORTANTWORLDDAYS
Int
ernat
ionalEvents
2004 I nt
ernati
onalYearofRice Worl
dFoodday October16
2005 I nt
ernati
onalYearofMicrocredit Wor l
dEnvi
ronmental March21
day
2007 I nt
ernati
onalYearofwater Worl
dwaterday March22
2008 I nt
ernati
onalYearofpotat
o Worl
dEnvi
ronmental June5
day
2009 I nt
ernati
onalYearoffi
bre Worl
dFarmerday December23
2010 I nt
ernati
onalYearofbi
odiversi
ty Wor l
dwetl
andday Februar
y2
2012 I nt
ernati
onalYearofcooperati
ve Wor l
dpovert
yday October17

INTERNATI ONALI NSTITUTESFORCROPI MPROVEMENT

 I
nter
nat
ionalCentr
ef orTropical
Agr i
cul t
ure–Columbi a
 I
nter
nat
ionalCentr
ef orWheatandMai zeimprov
ement–Mexi co
 I
nter
nat
ionalCentr
ef orPotato–Per u
 I
nter
nat
ionalCentr
ef orPlantGeneticResources–I t
aly
 I
nter
nat
ionalCropResearchI nst
it
utef ortheSemi AridTropi
cs–Hyder
abad,
Indi
a
 I
nter
nat
ionalFoodPol i
cyResearchI nstit
ute–Washi ngton,USA
 I
nter
nat
ionalRiceResearchInsti
tute–Mani l
a,Phil
iphines

AGRI CULTURALI NSTITUTIONSFORRESEARCHANDEDUCATI

ONSI
NINDI
A
Al
l Indiacoor dinatedResear chpr
oject
s–61
Net workpr ojects–17
I
CARI nstitut
ions–45
Nat i
onal agricultur
alresearchcent
ers-17
Nat i
onal Bureaux–6
Di
r ectorates- 25
Deemeduni versiti
es-4
Cent r
al University-1
StateAgr iculturalUniver
sit
ies–48

I
CARI
NSTI
TUTI
ONS
Cr
opResearchInstit
utes
Ri
ce
Cent
ralRi
ceResear chInsti
tute–Cut t
ack,Odessa
Cent
ralAgri
cultur
alResearchInstit
uteforAndaman&NicobarI
slands–PortBl
air
Cent
ralResearchInst
it
utef orDrylandAgri
cult
ure–Hy
derabad
Cent
ralAri
dZoneResear chInst
itute–Jodhpur
Nati
onalI
nsti
tuteforabioti
cSt r
essManagement–Mal egon,Maharasht
ra

Pul
ses
 Indi
anI
nst
it
uteofPul
seResear
ch–Kanpur
,Ut
tarPr
adesh

AO/
Economi
cs/Page50
Sugarcane
I
ndianInsti
tuteofSugarcaneResear ch-Lucknow,Utt
arPr adesh
SugarcaneBreedingInst
it
ute–Coi mbat or
e,Tamil
nadu
Fi
bres
 IndianInsti
tuteofCottonResearch–Nagpur ,Mahar asht
ra
 Cent r
alInsti
tuteofResearchonCot t
onTechnology -Mumbai
 Nat i
onalInsti
tuteofResearchonJut e&Alli
edFiberTechnology–Kol kat
a
 Cent r
alResear chI
nsti
tuteforJuteandAlli
edFibers–Bar ackpore,WestBengal
Tobacco
 Cent r
alTobaccoResear chInsti
tute–Rajamundhar y,AndraPradesh

Hor
ti
cult
uralCrops
I
ndianInsti
tuteofHor t
icul
turalResear ch–Bangal uru,Karnataka
I
ndianInsti
tuteforVegetableResear ch–Var anasi
Centr
alInst
ituteforTemper ateHor t
iculture–Sr i
nagar,Jammu&Kashmi r
Centr
alInst
ituteofSubTr opicalHorticulture–Lucknow, UttarPradesh
Centr
alPotatoResear chInsti
tute–Si ml a,Himachal Pr
adesh
I
ndianInsti
tuteofSpicesResear ch–Cal icut,Ker
ala
Centr
alPlantati
onCr opResear chInstitute–Kasor good,Kerala
Centr
alTuberCr opsResear chInsti
tute–Tr iv
anathapuram, Keral
a

Soi
lSci
enceInsti
tutes
 CentralSoilSali
nit
yResearchInsti
tute–Karnal
,Hary
ana
 Indi
anInstit
ut eofSoil
Science-Bhopal,MadhyaPr
adesh
 Centralari
dzoner esearchInst
it
ute–Jodphur ,
Raj
astan
 CentralI
nstituteofAgri
cult
uralEngineer
ing–Bhopal
,Madhy
aPr
adesh

I
CARResear
chCompl
ex
 I
CARResear
chCompl
exf
orEast
ernr
egioni
ncl
udi
ngcentr
eforMakhana–Pat
na
 I
CARResear
chCompl
exf
orNort
hEaster
nregi
on–Barapani
 I
CARResear
chCompl
exf
orGoa–Banaji
Fodder
 I
ndi
anGr
assLandandFodderr
esear
chI
nst
it
ute–Jhansi
,Ut
tarPr
adesh

Agr
icul
tur
alEngi
neeri
ng
 CentralI
nst
it
uteofPostHarvestandEngineer
ingandTechnol
ogy–Ludhi
ana
 CentralI
nst
it
uteofAgricul
tur
eEngineer
ing-Bhopal
Ani
malSci
ence&Fi sher i
es
 Indi
anSheepandWool ResearchI nsti
tute-Av i
l
kanagar,
Rajasthan
 Central
Inst i
tuteforResearchonGoat s–Makhdom
 Central
Inst i
tuteforResearchonBuf fal
oes–Hi ssar
 Nati
onal I
nst i
tuteofAni malNutrit
ionandPhy si
ology-Bangalore
 Central
Av ianResear chInsti
tute–I zatnagar
 Central
Mar i
neFi sheri
esResear chInstitut
e–Kochi
 Central
Inst i
tuteBrachishwaterAquacul ture–Chennai
 Central
InlandFi sheri
esResear chInstitute–Bar r
ackpore
AO/
Economi
cs/Page51
  Centr
alInst
ituteofFi
sheri
esTechnology–Cochi
n
 I
ndianInsti
tuteofNatur
alResins&Gums–Ranchi
 Centr
alInst
ituteofFr
eshwaterAquacult
ure–Bhubaneswar

Soci
alSciences
 I
ndianAgr i
cul
tur
alStati
sti
csResearch–NewDelhi
 National
AcademyofAgr icul
tur
alResear
ch&Management–Hy
der
abad
 Viv
ekanandhaPar v
atiy
aAnusandhanSansthan–Almor
a

Nat
ionalResearchCenter
s
 Nat ional
ResearchCent
reforAgr i
cultural Economi csandPoli
cyResear
ch–New
Delhi
 Nat ional
ResearchCent
reonPl antBi otechnology–NewDel hi
 Nat ional
ResearchCent
reforIntegratedPestManagement -NewDelhi
 Nat ional
ResearchCent
reforLitchi-Muzaf farpur
 Nat ional
ResearchCent
reforCitrus–Nagpur
 Nat ional
ResearchCent
reforGr apes-Pune
 Nat ional
ResearchCent
reforBanana-Tr ichi
rapalli
 Nat ional
ResearchCent
reforSeedSpi ces-Aj meer
 Nat ional
ResearchCent
reforPomegr anat e-Sol apur
 Nat ional
ResearchCent
reonOr chids–Pay kong, Siki
m
 Nat ional
ResearchCent
reforAgr oFor estry-Jhansi
 Nat ional
ResearchCent
reonCamel -Bikaner
 Nat ional
ResearchCent
reonEqui nes-Hi ssar
 Nat ional
ResearchCent
reonMeat-Hy der abad
 Nat ional
ResearchCent
reonPi g-Guwahat i
 Nat ional
ResearchCent
reYak–WestKemang
 Nat ional
ResearchCent
reMithun-Nagal and

Nat
ionalBureaus
 Nat i
onal Bur
eauofPl
antGeneticResources–NewDel hi
 Nat i
onal Bur
eauofSoi
lSurvey&LandUsePl anning–Nagpur
 Nat i
onal Bur
eauofAgri
cul
tural
lyI
mportantMi cr
oor gani
sms-Mau
 Nat i
onal Bur
eauofAgri
cul
tural
lyI
mportantI nsects-Bangal
uru
 Nat i
onal Bur
eauofAni
malGenet i
cResour ces-Kar nal
 Nat i
onal Bur
eauofFi
shGenet i
cResources–Lucknow

Di
rect
orates
 Di r
ector
atesofMai zeresearch–NewDel hi
 Di r
ector
atesofRiceResear ch-Hy derabad
 Di r
ector
atesofWheatResear ch-Karanal
 Di r
ector
atesofOilseedResear ch–Hy derabad
 Di r
ector
atesofSeedResear ch-Mau
 Di r
ector
atesofSor ghum Research-Hy derabad
 Di r
ector
atesofGroundnutResear ch-Junagadh
 Di r
ector
atesofSoy beanResear ch-Indor e
 Di r
ector
atesofRapeseed&Must ardResear ch-Bhar
atpur
AO/
Economi
cs/Page52
  Di
rector
atesofMushr oom Resear ch-Sol an
 Di
rector
atesofOnion&Gar l
icResear ch-Pune
 Di
rector
atesofCashewResear ch-Put t
ur
 Di
rector
atesofOil
palm Resear ch–WestGodav ar
i
 Di
rector
atesofMedi cinal&Ar omat i
cpl antsResear ch-Anand
 Di
rector
atesofFlori
cul t
ureResear ch–NewDel hi
 Pr
ojectDir
ector
atesofFar mingSy stem Resear ch-Modi puram
 Di
rector
atesofWat erManagementResear ch-Bhubaneshwar
 Di
rector
atesofWeedsci enceResear ch-Jabalpur
 Pr
ojectDir
ector
atesofCat t
le-Meer nut
 Pr
ojectDir
ector
atesofFoot&Mout hDi sease-Mukt eshwar
 Pr
ojectDir
ector
atesofPoul t
ry–Hy derabad
 Pr
ojectDir
ector
ateonAni malDi seaseMoni tori
ngandSur vei
ll
ance-Bangal
uru
 Di
rector
atesofKnowl edgeManagementi nAgricult
ur e–NewDel hi
 Di
rector
atesofColdWat erFisher i
esResear ch–Nai ni
tal
 Di
rector
atesofResear chonWomeni nAgr i
cult
ur e-Bhubaneshwar

Centr
alAgr
icul
tur
alUniver
sit
y
 Cent
ralAgr
icul
tur
alUniver
sit
y–I
mphal
,Mani
pur

AO/
Economi
cs/Page53