CONSTRAINTS / PROBLEMS OF INDIAN AGRICULTURE

CAUSES OF LOW AGRICULTURAL PRODUCTIVITY

Indian agriculture is affected by low productivity and production due to various problems.
The problems of agriculture can be broadly divided into four groups as shown below.

I. TECHNICAL/CULTIVATION RELATED PROBLEMS

1. Lack of Irrigation Facilities: Indian agriculture depends upon monsoon to a good

extent. is The irrigated area is comparatively less in India as compared to other
countries like USA, UK, China, Japan, etc. For instance, in 2000-01, only 43.4% of
the total foodgrains crop area was under irrigation. The remaining 56.6% of the
foodgrains crop area had to depend upon monsoon. Also, in India monsoon is quite
erratic, especially in certain states such as Rajasthan, Gujarat, Madhya Pradesh,
Maharashtra, etc., and as such it affects production and productivity of crops.
2. Problem of Fertilizers: Indian agriculture is affected by the problem of fertilizers.
There is inadequate use of fertilizers and alsc poor quality of fertilizers. Even today,
some of the small and marginal farms use only natural fertilizers such as cow-dung,
and leaves as manure or fertilizers. They do not use good quality chemical fertilizers
and in proper quantity, which in turn affects agricultural production.
3. Poor Quality of Seeds: Indian farmers, especially the small and marginal farmers,
use poor quality of seeds. They use farm seeds rather than laboratory developed
seeds. The use of HYV seeds is limited in India. As a result of this, the agricultural
productivity is low in India.
4. Problem of Technology: Indian farmers, especially the small and marginal farmers
use outdated technology. They do not use the latest techniques such as tractors,
land tillers, etc. This is mainly due to financial problems. Only the large farmers do
get loans to purchase tractorsland tillers, etc. As a result of this, the agricultural
productivity of small farmers is affected.
5. Fragmented and Small Land Holdings: Over 90% of the Indian farmers belong to
the marginal and small farmers' category. The average size of land holding in India is
abom 1.5 hectares. Not only are the holdings small but also they are fragmented and
scattered in several places. The fragmented and small land holdings affect
agricultural productivity and production. This is because a good amount of land gets
wasted due to fencing between two plots of land belonging to two different farmers.
Also small land holdings do not max it possible to use farm machines such as
tractors.
II. FINANCE RELATED PROBLEMS
6. Agricultural Indebtedness: It is said that Indian farmer is born in debt, lives in debt,
and dies in debt. A good number of Indian farmers, especially the small and marginal
farmers are subject to indebtedness. As a result, the production and productivity of
their land get affected, as they continue to repay debts, and are not in a position to
undertake farm development activities.
The small farmers continue to obtain loans from moneylenders at high interest rates
due to the difficulties in obtaining loans or credit from organized sectors like banks.
Some of the farmers are also ignorant about bank facilities.
7. Problem of Moneylenders: The farmers depend upon the unorganized sector, i.e.,
the moneylenders for their credit requirements. They borrow funds at high interest
rates, rangin from 15% to 24% per annum and even more. Again, the moneylenders
manipulate the loan records and cheat the illiterate farmers.
8. Problem of Institutional Credit: Indian farmers find it difficult to obtain institutional
financ due to various formalities in obtaining finance, and also due to inadequacy of
bank branches in rural areas. Some small farmers are not even aware of institutional
finance facilities. However, it is to be noted that over the years, the share of
institutional finance in agriculture credit has increased and that of non-institutional
sources has declined.

III. MARKETING RELATED PROBLEMS

9. Marketing Related Problems: Indian farmers face marketing problems. The

marketing problems indirectly affect agricultural productivity. Due to the
marketing problems. The farmers are not in a position to realize good prices for their
produce and as such there is a lack of incentive to improve production and
productivity. The marketing problems include:
• Inadequate transport facilities.
• Inadequate and poor warehousing facilities.
• Defective packaging, etc
.
10. Problem of Warehousing: Indian farmers face the problem of warehousing. There
are inadequate warehousing facilities. Therefore, the farmers have to go for distress
sale, which in turn results in lower prices to the farmers. Also a good amount of
agricultural produce gets damaged or destroyed due to poor quality of warehousing.

11. Inadequate Transport: Indian agricultural marketing is affected due to inadequate

transport facilities. Farmers face the problem of transportation to move the farm
produce from the farms to the marketplace. Quite often, there is a delay in
transportation, which damages or spoils the perishable agricultural produce.
It is estimated that about 3 lakh villages out of the total 6 lakh villages of India do not
have proper roads and transport facilities. Due to lack of transport facilities, the
farmers are forced to sell their produce in the local markets, and as such they realize
lower prices.

12. Inadequate Credit Facilities: The farmers require credit facilities, especially during
the busy season (Oct. to June) for marketing purposes, i.e., warehousing,
transportation, etc.Quite often, the farmers do not get the right amount of credit from
 the organized sector. Therefore, they have to depend upon the unorganized sector,
i.e ..., moneylenders, who exploit the farmers by charging high interest rates, and
also by manipulating the loan records.

13. Lack of Grading: The Indian farmer does not give much importance to grading. He
sells the farm produce in one lot to the traders. Therefore, the farmers get low prices
for their produce. The traders do the grading or sorting out of farm produce on the
basis of size, shape, weight, etc, and obtain better prices from the customers.

14. Problem of Market Information: Indian farmers find it difficult to get the right market
information in respect of demand, prices, and latest developments in the agricultural
sector, etc. This may be due to lack of proper data generation efforts or the farmers
are not interested in obtaining market information due to ignorance and illiteracy.
Therefore, the farmers may not be able to fix the right prices. They may also find it
difficult to plan their production properly.

15. Malpractices in Unregulated Markets: In India, there are several unregulated

marks There are several malpractices adopted by agents and traders in unregulated
markets. malpractices are:
Fraudulent weights and measures.
• Rigging of prices.
• Higher market charges.
Such malpractices are to the disadvantage of the farmers. Even in regulated markets
there are malpractices to the disadvantage of the farmers.

16. Problem of Cooperative Marketing: There is less emphasis on cooperative

marketing. India in respect of agricultural produce. Farmers prefer to sell their
produce individually. The farmers often lack bargaining power. The manipulative
traders cheat the individu farmers by paying lower charges.

17. Problem of Handling: The quantity and quality of agricultural produce gets affected
while handling during transit. The workers are not trained to handle the produce
properly with loading and unloading. As a result, about 10% of the produce gets
damaged or destroyed due to poor handling.

18. Existence of Intermediaries: There are a large number of intermediaries between

the farmer and the consumer. There are agents, wholesalers and retailers. A long
chain of intermediaries increases the marketing costs due to commissions or margins
of the intermediaries. There are also cases where intermediaries provide finance at
the time of cultivation, and the farmers are forced to sell their produce at low prices to
such intermediaries.

19. Inadequate Packing: Indian agricultural marketing is affected due to inadequate or

unscientific packing. Quite often, the agricultural produce is packed unscientifically.
This affects the quantity as well as the quality of the produce. As a result of this the
Indian farmers stand to lose by way of lower prices for his produce.
 IV. GENERAL PROBLEMS

20. Low Labour Productivity: Average Indian farmer is weak both physically and
mentally:
- Physical weakness due to poor nutrition.
- Mental weakness due to poor farm-related education and training.
Therefore. the productivity of farm labour in India is low as compared to other
countries.

21. Problem of Agricultural Research: There is inadequate agricultural research in

India. The amount of morey spent on agricultural research is very low as compared
to other countries. Due to limited research, there is a limited effect both on
productivity and production of agricultural produce.
22. Social Factors: The social environment in rural areas is an important factor of low
agricultural productivity. Indian farmers are illiterate and conservative. They fail to
understand the benefits of technology and modern inputs to improve productivity.
The Indian farmer spends a lot of money on social and religious functions. This
affects savings, and as such they cannot invest in agriculture for better technology
like tractors.

23. Problem of Floods and Droughts: In India, there is a paradox of floods and
droughts. In other words, Indian agriculture is subject to floods as well as droughts. In
certain areas like that of Rajasthan, there is scarcity of rainfall which results in
droughts, and in certain north eastern parts of India like Assam receives heavy
rainfall which results in floods. The floods and droughts affect the productivity and
production of agriculture in India.

MEASURES TO OVERCOME AGRICULTURAL PROBLEMS

The following are the measures undertaken to improve the agricultural productivity:

1. Land Reforms: The government has introduced several land reforms after
independence.
Some of the important land reforms are as follows:
• Abolition of intermediaries.
• Regulation of tenancy rent.
• Ceiling on land holdings.
• Security of land tenure.
• Ownership rights to the tenants, etc.
The land reforms have benefited the farmers. However, the desired results are far
from satisfactory.

2. Financial Facilities: The government has made efforts to provide financial support
to the agricultural sector. As a result of institutional credit support, the dependence
on unorganized sector has reduced. NABARD is the apex financial institution, which
 facilitates agriculture credit through refinancing the banks that provide direct finance
to agriculture. The flow of institutional credit during 2003-04 is estimated as follows:

3. Marketing Facilities:

Regulated Markets: The state governments have set up regulated markets in order to
protect the farmers from the malpractices of traders and brokers. The regulated markets
ensure proper prices to the farmers.

Warehousing Facilities: A number of warehouses have been constructed for storin,

agricultural produce. In most of the states, warehousing corporations have been set up to
provide warehousing facilities to farmers. Due to warehousing facilities, farmers need not go
for distress sales, and as such they can realize better prices for their produce.

Other Marketing Facilities: Apart from regulated markets and warehousing, farmers are
provided with a number of other marketing facilities such as better transport facilities, quality
control laboratories, etc. The marketing facilities have enabled the farmers to solve their
marketing problems, and as such they have realized better prices. The marketing facilities
indirectly helped to improve agricultural productivity.

4. Irrigation Facilities: The government has increased investment in irrigation facilities.

In 1951, only 17% of the total crop area was under irrigation. In 2000-01, the total
foodgrains crop area under irrigation has increased to 44%. Among the food grains
crops, wheat crop area under irrigation is the highest at over 88%, followed by barley
at 63% and rice at 54% However, it is to be noted that in case of certain crops like
jowar and bajra, the total area under irrigation is only 8%, and in case of total pulses
only 13% of the crop area is under irrigation.

5. Better Varieties of Seeds: India has developed better varieties of seeds in case of
rice wheat, maize, etc. Better varieties of seeds help to improve agricultural
productivity. For instance, the High Yielding Varieties (HYV) of seeds in the case of
foodgrains resulted in the increase of foodgrains production. Efforts are made by the
government to encourage farmers to use HYV of seeds.
 6. Better Farm Technology: Farm technology has improved agricultural productivity.
Thi use of tractors and other farm equipment has increased productivity of labour and
land, and at the same time reduces overheads and increases production. Farmers
are encouraged to make use of the latest technology by making available loans at
lower rates of interest.

7. Fertilizers: Proper use of good fertilizers, especially nitrogen, phosphorus, and

potash can improve agricultural productivity. However, in India, the use of fertilizers is
low. It is less than 100 kgs per hectare, whereas it is nearly 4 times more in China.

8. Agricultural Research & Development: In India, Indian Council of Agricultural

Research (ICAR), various agricultural universities, and centers conduct agricultural
research. The research and development has helped to develop improved methods
of cultivation, soil conservation, protection to crop, etc.

Technology led development in agriculture has made India self-sufficient in foodgrains and a
leading producer of several agricultural commodities in the world. Due to contributions of
agriculture research, the following revolutions took place in the field of agriculture and
related areas:
• Green revolution in crops.
• Yellow revolution in oilseeds.
• White revolution in milk production.
• Blue revolution in fish production,
• Golden revolution in horticulture.

9. Water Management and Soil Conservation: Efforts are made to educate the
farmers to use irrigation water more efficiently. Several rural projects have been
undertaken for the purpose of water management, and soil conservation. Now water
management and soil conservation projects are undertaken under Swarnajayanti
Gram Swarozgar Yojana (SGSY).

10. Cooperative Farming: The government is encouraging cooperative farming.

Cooperative farming is a suitable remedy for solving the problem of small and
fragmented land holdings. Through cooperative farming, the small and marginal
farmers can pool their land and other resources, and undertake cultivation jointly.
They can also undertake cooperative marketing of their produce. However, the
progress in this area is very slow.
AGRICULTURAL MARKETING

PROBLEMS (DEFECTS/CONSTRAINTS) OF AGRICULTURAL MARKETING IN INDIA

In India, agricultural marketing suffers from several problems or defects.

1. Problem of Warehousing: Indian farmers face the problem of warehousing. There

are inadequate warehousing facilities. Therefore, the farmers have to go for distress
sale, which in turn results in lower prices to the farmers. Also a good amount of
agricultural produce gets damaged or destroyed due to poor quality of warehousing.

2. Inadequate Transport: Indian agricultural marketing is affected due to inadequate

transport facilities. Farmers face the problem of transportation to move the farm
produce from the farms to the marketplace. Quite often, there is a delay in
transportation, which damages or spoils the perishable agricultural produce.
It is estimated that about 3 lakh villages out of the total 6 lakh villages of India do not
have proper roads and transport facilities. Due to lack of transport facilities, the
farmers are forced to sell their produce in the local markets, and as such they realize
lower prices.

3. Inadequate Credit Facilities: The farmers require credit facilities, especially during
the busy season (Oct. to June) for marketing purposes, i.e., warehousing,
transportation, etc.Quite often, the farmers do not get the right amount of credit from
the organized sector. Therefore, they have to depend upon the unorganized sector,
i.e ..., moneylenders, who exploit the farmers by charging high interest rates, and
also by manipulating the loan records.

4. Lack of Grading: The Indian farmer does not give much importance to grading. He
sells the farm produce in one lot to the traders. Therefore, the farmers get low prices
for their produce. The traders do the grading or sorting out of farm produce on the
basis of size, shape, weight, etc, and obtain better prices from the customers.
 5. Problem of Market Information: Indian farmers find it difficult to get the right market
information in respect of demand, prices, and latest developments in the agricultural
sector, etc. This may be due to lack of proper data generation efforts or the farmers
are not interested in obtaining market information due to ignorance and illiteracy.
Therefore, the farmers may not be able to fix the right prices. They may also find it
difficult to plan their production properly.

6. Malpractices in Unregulated Markets: In India, there are several unregulated

marks There are several malpractices adopted by agents and traders in unregulated
markets. malpractices are:
Fraudulent weights and measures.
• Rigging of prices.
• Higher market charges.
Such malpractices are to the disadvantage of the farmers. Even in regulated markets
there are malpractices to the disadvantage of the farmers.
7. Problem of Cooperative Marketing: There is less emphasis on cooperative
marketing. India in respect of agricultural produce. Farmers prefer to sell their
produce individually. The farmers often lack bargaining power. The manipulative
traders cheat the individu farmers by paying lower charges.

8. Problem of Handling: The quantity and quality of agricultural produce gets affected
while handling during transit. The workers are not trained to handle the produce
properly with loading and unloading. As a result, about 10% of the produce gets
damaged or destroyed due to poor handling.

9. Existence of Intermediaries: There are a large number of intermediaries between

the farmer and the consumer. There are agents, wholesalers and retailers. A long
chain of intermediaries increases the marketing costs due to commissions or margins
of the intermediaries. There are also cases where intermediaries provide finance at
the time of cultivation, and the farmers are forced to sell their produce at low prices to
such intermediaries.

10. Inadequate Packing: Indian agricultural marketing is affected due to inadequate or

unscientific packing. Quite often, the agricultural produce is packed unscientifically.
This affects the quantity as well as the quality of the produce. As a result of this the
Indian farmers stand to lose by way of lower prices for his produce.

GOVERNMENT MEASURES TO SOLVE MARKETING PROBLEMS

In order to solve various agricultural marketing problems, the Government has taken several
measures. These measures are briefly explained as follows:
1. Warehousing Facilities: In 1957, Central Warehousing Corporation was set up to
assist farmers in solving storage problems. A number of states have set up state
warehousing corporations. The warehousing facilities helped the farmers to reduce
distress sale immediately after harvesting. In other words, due to warehousing
facilities, farmers can get better prices for their produce. Again, against the
warehouse receipt, the farmers can obtain short-term loans from the banks, which in
turn help them to avoid distress sale. The Government of India has set up Food
Corporation of India: The FCI buys foodgrains from the farmers, and then stocks
them in its huge godowns spread across all the states in the country.

2. Credit Facilities: Credit facilities are made available to the farmers at village level. A
number of uncooperative credit societies have been set up. There are regional rural
banks, which provide credit facilities to the small and marginal farmers to meet their
working capital and other financial needs. The commercial banks also provide
finance to the farmers in the rural areas. The institutional sources provide credit to
farmers at low interest rates.

The finance provided by the banks in 2003-04 was estimated at Rs. 80,000 crore.
The share of banks in institutional finance in 2003-04 was as follows:

3. Grading and Standardisation: The government has set up a Central AGMARK

Laboratory at Nagpur, and a number of (22) regional AGMARK labs. Samples of
important agricultural products are analysed for their physical and chemical
properties. After analysing, the Laboratory gives AGMARK.

The AGMARK creates confidence in the minds of consumers. As such, the

consumers would be willing to pay better prices for agricultural products with
AGMARK. So far AGMARK standards have been framed and notified in respect of
163 commodities which include food grains, fruits, vegetables, spices, oil seeds,
livestock, dairy and poultry products.
4. Market Information: A good deal of market information is supplied to the farmers
through radio, press, etc., in respect of prices and other matters. The government
authorities conduct market surveys from time to time. Information collected from such
surveys is passed on to the farmers

5. Regulated Markets: Regulated markets have been set up in most of the states in
order to protect the farmers against malpractices of traders and brokers.

The regulated markets perform the following functions:

- Fixing of market charges or costs.
- Fixing of prices for farm products.
- Ensures correct weights and measures, etc.

6. Use of Standard Weights: The government has introduced uniform weights and
measures throughout the country. Any trader found with defective weights and
measures is punished under the law. The regulated markets ensure the use of
correct weights and measures.

7. Fixation of Minimum Support Prices: In order to solve the problem of fluctuations

in agricultural prices, the government has set up the Commission for Agricultural
Costs and "Prices (CACP). The CACP announces minimum support prices for almost
all agricultural crops. Every year, there has been an increase in minimum support
crops. This has helped the farmers to secure better prices for their produce even
during bumper crops.

8. Cooperative Marketing: Government is encouraging cooperative farming and

cooperative marketing throughout the country. The small and marginal farmers are
encouraged to form cooperatives in order to market their produce. The cooperative
society assembles the agricultural produce from the members, and sells at better
prices in the market. Due to the cooperative societies, the farmers are in a better
position to get better prices.

9. Directorate of Marketing and Inspection: The Directorate of Marketing and

Inspection has been set up by the Government of India in order to assist the Central
and StateGovernment to solve agricultural marketing problems.

This Directorate plays an important role in agricultural marketing. The role includes:

• Fixes grades and standards for agricultural products.

• Regulates market practices.
• Undertakes marketing research and surveys.
• Undertakes inspection of quality of agricultural produce.
10. Transport Facilities: Indian railways assist farmers in transporting the produce from
the farms to the markets in towns and cities.

The banks provide loans to the farmers or cooperatives to purchase trucks, tempos,
etc., to transport the farm produce.

Nowadays, private transport operators are provided loans by banks to purchase and
operate vehicles, which can be used to transport agricultural items from villages to
markets.

11. Commodity Boards: The Government of India has set up about nine commodity
boards to assist farmers in production and marketing of commodities. The boards
advice the farmers in respect to production, and provide assistance to promote and
market the commodities. The commodity boards include:

● Coffee Board. • Spices Board. • Central Silk Board

● Coir Board . • Tea Board. • Coconut Development Board
● Rubber Board. • Tobacco Board. • National Horticulture Board.

12. National Institute of Agricultural Marketing: The NIAM was set in 1988. This
institute plays an important role in agricultural pricing. The role of NIAM is as follows:
• It conducts training programmes in respect of agricultural marketing.