Agricultural Prices and Production, 1757–1947

views updated

AGRICULTURAL PRICES AND PRODUCTION, 1757–1947

AGRICULTURAL PRICES AND PRODUCTION, 1757–1947 Agricultural data for late-eighteenth century India are not of adequate quality to permit us to say much about production or prices. The few British Indian agricultural products that emerged as major commodities of global trade were cotton, indigo, opium, and rice. Production of the more commercialized of these crops, indigo and opium, tended to be restricted, and in any case, their quantitative significance for peasant income remains obscure.

The second half of the nineteenth century, however, saw significant expansion of land under cultivation. In new crops that emerged as major exportables, such as cotton and wheat, there was also a steady rise in yield per acre. National income estimates confirm that agricultural production expanded in the late nineteenth century at the average rate of about 1 percent per year, thanks to an increasing area under cultivation and the availability of wasteland made cultivable by canal irrigation. Large-scale expansion in cropped area usually involved the relocation of capital and labor on a large scale as well. Important regions of agrarian expansion were the Punjab, the Narmada valley, western part of the United Provinces, and coastal Andhra.

For the period 1890 to 1947, the data are richer, based on returns from villages and district officials. These statistics can be used to construct provincial and all-India series on crop output. This data set, however, has problems. The official method of estimating crop output was to multiply cropped area by two figures: a "standard" yield, and a "condition factor" that measured the deviation of actual yield from the standard or the long-term norm. The standard yield was estimated by crop-cutting experiments in sample plots in a normal season, and did not change from year to year. In each season, the village officials gave figures for the area cultivated and the condition factor, the latter almost always reported as less than one, whereas in theory it should have exceeded one in a good season. The standard yield might have been set too high. It is also possible that some element of pessimism or underreporting was built into the system. That being said, the data are still usable, given that the over-estimation in standard yield gets partly offset by a low condition factor. Agricultural performance in the inter-war period (1918–1939) was dismal. From 1891 to 1946, the annual growth rate of all crop output was 0.4 percent, and food-grain output was practically stagnant. There were significant regional and intercrop differences, however, nonfood crops doing better than food crops. Among food crops, by far the most important source of stagnation was rice. Bengal had below-average growth rates in both food and nonfood crop output, whereas Punjab and Madras were the least stagnant regions. In the interwar period, population growth accelerated while food output decelerated, leading to declining availability of food per head. The crisis was most acute in Bengal, where food output declined at an annual rate of about 0.7 percent from 1921 to 1946, when population grew at an annual rate of about 1 percent.

After 1918 land scarcity relative to population pushed cultivation into inferior lands. This "diminishingreturns" scenario explains why the growing land-shortage and deceleration in yield tended to occur together, and why the crisis was particularly acute in regions like Bengal, where population pressure was greatest. It is not easy, however, to separate the effect of diminishing returns from that of institutional differences. Property rights structure varied between the major regions; and agricultural performance tended to be poorer in Bengal's absentee landlord "permanent settlement" areas.

Investment

The question of investment in agriculture is an important one. In monsoon-dependent India, nearly 90 percent of the annual supply of moisture occurs during the three "monsoon" months, from June to September. Even those months of rain are barely adequate for cultivation in many parts of peninsular India and in the semiarid northwest. Extension of cultivation, therefore, depended on manmade systems to increase the supply of water. Some systems, such as tanks and canals, were bulky and costly, requiring either state or community effort. Others, such as wells, could be privately funded. While pre-British regimes did supply such public goods, they rarely supplied them on a satisfactory scale. Community efforts worked better in some regions of India. Private investment in irrigation seemingly accelerated when market incentives were strong.

India's irrigated acreage increased from around 5 to 6 percent of all cropped area in the early nineteenth century to 22 percent in 1938. That expansion occurred mainly in government canals and private wells. Canal construction and the restoration of older works started from the early nineteenth century in Punjab, Madras, and the western districts of the United Provinces. The pattern of growth in Madras and the United Provinces suggests that canals and wells were complementary investments, rather than being substitutes. Usually, government canals encouraged a change in cropping pattern and raised the value of land, which in turn stimulated private investment in wells.

Prices

Reliable price series begin from the mid-nineteenth century. Prior to that point, considerable price data exist, but only for a few commodities. Agricultural prices experienced pronounced cycles in the first half of the nineteenth century, but from the third quarter began to rise steadily and significantly until around 1920. For example, the price of wheat in 1920 was roughly three times what it had been in 1870. The expansion of the global economy and greater overseas demand for primary commodities account for the relatively greater rise in prices of exportable food grains as compared to other commodities. The steady devaluation of the rupee between 1873 and 1893 due to global depreciation in silver (the rupee was a silver coin and could be freely minted until 1893) was another factor. From the mid-1920s world commodity prices began to fall, and they fell precipitously in India. Once again, the monetary policy of the colonial government was faulted, this time for its politically motivated persistence in maintaining an overvalued rupee.

The longer price trends and cycles were frequently interrupted by violent short-term fluctuations. The size of every harvest was the immediate cause of these fluctuations. Several contemporary analysts credibly argued that the expansion of India's railway network and consequent exports reduced the amplitude of harvest-induced price fluctuations over time. Until 1920 the commercialization of Indian agriculture did induce growth. After that, the world market diminished and land became increasing scarce, imposing hardships on peasants and landless laborers, in some areas, like Bengal, leading to famine.

Tirthankar Roy

See alsoLand Tenure from 1800 to 1947

BIBLIOGRAPHY

Blyn, George. Agricultural Trends in India, 1891–1947: Output, Availability, and Productivity. Philadelphia: University of Pennsylvania Press, 1966.

Guha, Sumit, ed. Growth, Stagnation or Decline? AgriculturalProductivity in British India. Delhi and New York: Oxford University Press, 1992.

Roy, Tirthankar. The Economic History of India, 1857–1947. Delhi and New York: Oxford University Press, 2000.

About this article

Agricultural Prices and Production, 1757–1947

Updated About encyclopedia.com content Print Article Share Article

NEARBY TERMS

Agricultural Prices and Production, 1757–1947