Occasional Paper-13

Problems and Prospects of Agricultural

Development in Tamil Nadu

v. RAJAGOPALAN

National Bank for Agriculture and Rural Development

Mumbal
2000
 Occasional Paper-13

Problems and Prospects of Agdcultural

Development in Tamil Nadu

V. RAJAGOPALAN

.
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.

ational Bank for Agriculture and Rural Development

1

Mumbai

2000
Author

Dr. V. Rajagopalan
Chairman,
Center for Development And Policy Studies, Chennai and
former Vice Chancellor,
Tamil Nadu Agricultural University, Coimbatore, India.

G. 9, 208 - HIG Flats (TNHB),

Ashok Pillar Salai West,
K.K. Nagar, Chennai - 600 078.

"', ..-
I ( \' ;

,
L.

The usual disclaimer about the responsibility of the National Bank as the facts
citep and views expressed in this paper is implied.

Published by National Bank for Agriculture and Rural Development, Department of Economic
Analysis and Research, Jeevan Seva Complex (Annexe), S. V. Road, Santacruz (W),
Mumbal - 400 054 and Printed at Karnatak Orion Press, Fort, Mumbai - 400 001.

ii
 CONTENTS

S. No. Title Page No.

CHAPTER I INTRODUCTION 1 - 22
1.1 The Setting 1
1.2 Climate and Rainfall 1
1.3 Demography 3
1.4 Structure of Agricultural Production 5
1.5 Sectoral Development 8
1.6 Capital Formation 13
1.7 Poverty Scenario 15
1,8 Regionalisation 16
1.9 Development Focus 20
1,10 The Design of the Study 22

CHAPTER II RESOURCE ENDOWMENT 23 - 39

2.1 Land Resources 23
2.2 Water Resources 31

CHAPTER III CROP ACTIVITIES PATIERN AND DISTRIBUTION 41 - 84

3,1 Crop Patterns 41
3.2 Industrial Crops 79

CHAPTER IV AGRICULTURAL PRICES 85 - 94

4.1 Price Relatives 85
4.2 Supply Response Regressions 88

CHAPTER V AGRICULTURAL FINANCE 95 - 112

5.1 Structure 95
5.2 FinanCing Agriculture 104

CHAPTER VI CROP ALLOCATION MODELS 113 - 129

6.1 Preliminaries 113
6.2 The Issues 114
6.3 A Model 116
6.4 Base Level Solution 118
6.5 Variable Resource Programme 121

iii
CHAPTER VII POLICY INSTRUMENTS AND PROGRAMMES 130 - 153
7.1 Development Projects 131
7.2 Policy Perspectives 135

CHAPTER VIII CONCLUSIONS 154 - 159

REFERENCES 160
 CHAPTER I
INTRODUCTION

1.1 The Setting

Situated at the southern end of the peninsular India between 85' and
1335' at the northern latitude and 7615' and 1820' of the eastern
longitude, Tamil Nadu spreads over an area of 13.1 million hectares whic;'
accounts for four per cent of the area and 6.6 per cent of population of
India. The State has 920 km of coast line along the eastern border and
700 km of mountainous stretch of the Western Ghats including the Nilgiris,
Anamalais and Palani Hills with altitudes ranging between 3000 feet and
8000 feet; the Eastern Ghat hills of Javadis, Shervarayan, Kalrayans and
Pachamalais, interspersed in the north along the borders of Andra Pradesh
and Karnatka states and the Bay of Bengal in the east and Indian ocean
down south (vide Fig. 1).

Western Ghats forms a complete watershed and most of the rivers,

except Paraliyar, Vattasery and Phazhayar, are east flowing. The main
rivers include the Cauvery with tributaries of Bhavani, Amaravathi and
Noyyal and the rivers of Vaigai, Tambiraparani, Palar, Ponniyar and Vellar.
The rivers are supplemented by a number of system and non-system tanks
spread across the plains, and wells for irrigation. The biotic potential
includes a variety of crops ranging from tropical, sub-tropical to temperata
crops along with diversified fauna. Major annual crops are rice, cholam
Oowar), cumbu {bajra), grams and pulses, sesamum, groundnut, cotton and
sugarcane. Horticultural perennials include citrus, mango, banana and
grapes; and the common vegetdbles are tnmato, beans, bendi, greens and
cucurbits. Tea, Coffee, rubber and cardamom are the plantation crops
grown in the hills.

1.2 Climate and RalnfaJi

Climate in Tamil Nadu is influenced by its location which straddles the

Tropic of Cancer and lays in the path of monsoons. The climate in the
State is mainly tropical with the range of temperature between 43C and
18C. Sub-tropical and temperate clim~te prevc:.il in the Nilgiris and
Kodaikkanal (Palani) Hills and under its influences plantation crops, tree
spices, cole vegetable, and temperAte fruits are grown. In such a hot
latitude, plant growth is extremely good it there Gre supplies of water and
is virtually impossible if they are not. The South West Monsoon (SWM)
arrives in -early June and sheds most of the load into the eastern jungles
of the Western Ghats between 120 mm and 500 mm rains occur over a
wide area upto early September. By the end of September, the monsoon

1
retreats as North East Monsoon (NEM) and returns to the State with
heavy, abundant and reliable rainfall of 760 mm to 1500 mm over the
Coramandal coast. As it moves, the rainfall decreases steadily toward south
and towaros interior. The distribution of rainfall varies between 1000-1500
mm over the north-east, towards south and centre.

Rainfall and its distribution over the seasons and over a period of 35
years (1958/59-1992/93) are summarised in Table 1. As could be seen
from the table, the State experiences an annual normal rainfall of 942 mm
distributed over four seasons; Southwest monsoon, Northeast monsoon,
Winter and Summer rains. Approximately one-third of annual rains are
recorded during SWM and it may be noted that the normal rainfall is 306
mm against 3000 mm received over Kerala and the Western Ghats, as the
state is located in the rain shadow regions. The other monsoon, viz., NEM,
brings around 48 per cent of annual rains and together the two monsoons
account for 80 per cent, the balance being sharec by Winter and Hot
weather seasons. The actual rains received in the last 35 years (1958/59-
1992/93) is approximately 95 per cent of the normal rainfall.

Table 1 : Rainfall Distribution (1958/59-1992193)

Particulars Southwest Northeast Winter Hot weather Total
monsoon monsoon ,;eason season (June May)

1" Normar Rains (in mm)

(JuneSept.)

306 (325)
-----1;-"- - -"- "
(Oct-Dec)

448 (476)
(Jan-Feb.)

50 (5"3)
(March-May)

138 (1"6)
"-"---
942 (100.0)
--
2" Actual Rains (In mm) 318 (35.6) I 432 (48"4) 29 (3.3) 113 (12.7) 892 (100.0)
f-- --
3. CV (%) 17.0 26.9 131.4 29.9 16.0
.. _---- r-----
4. Excess Rainfall
(No of years) 17.0 (20.0) 6 (17.1) 2 (5.7) 8 (22.9)
-_- --
5. Deficit Years 3 (86) 11 (314) 1 (2"9) 19 (543) 2 (57)
---- - -_----.
6. Normal Years 25 (714) 18 (514) 28 (800) 14 (40.0) 25 (714)

NB: a} Lines 1-2 : figures in parentheses are seasonal shares of total annual rainfall
b) Lines 4-6 figures in parentheses are percentage of years to the total of 35 year period.
Source : BaSic Statistics, Dept. of Statistics, GOTN, Madras.

As could be noted, during the period of 35 years annual rains have

been normal in 25 years, excess in eight years and deficit in two years.
Seasonwise, SWM rRins are in excess for seven years, normal for 24 years
and deficit for four years; and NEM rains were in excess for six years,
normal for 18 years and deficit in 11 years. Further, there are regional
variations in quantum and distribution of rainfall. The Coramandal coastal
belt, the Cauvery delta, Kanyakumari and the Nilgiris hills have relatively
high rainfall of 1000 to 1200 mm a year. The south east coast is in the

2
rainshadow region of Srilanka and has low rainfall (800-900 mm) whereas
the central regions enjoy moderate bllt well distributed rainfall. The average
number of rainy days is 50 for the year with regional variation of 206 days
in the Nilgiris and 45.8 days in Aamanathapuram district.

1.3 Demography

The demographic features of the population of the State are presented

in Table 2.

According to 1991 Census, the State population is 55.86 million and

the trend in the decennial growth of population shows a decrease from
22.30 per cent in 1971 to 17.50 per cent in 1981 and 15.39 per cent in
the subsequent decade. These rates are consistenly lower than that of the
country as a whole. The density of population has been increasing all
along from 202 in 1941 to 317 in 1971 and 429 in 1991. This happens
inspire of declining decennial population growth. Alternately put, the per
capita land available was 0.005 hectares in 1941 which had declined to
Cl.002 hectares in 1991, a disturbing trend indeed.

Literacy rate has increased almost four-fold over the last five decades
with 62 per cer.t in 1991 as against 52 per cent for the country as a
whole. The basic requirement of human resource development is to provide
for universalisation of education to upgrade skills and attitude of people for
effective worker participation. Tamil Nadu has achieved excellent results
through investment in social sectors, particularly health and education. The
State has allocated 21.7 and 5.4 per cent of budget expenditure for
edu<.:ation and health in 1994/95 and the corresponding figures for the year
1990/91 are 25 and 5.2 per cent, respectively.

Table 2 : Population Characteristics in Tamil Nadu

Particulars 1941 1951 1961 1971 1981 1991
1. Total population (in million) 29.27 30.12 33.69 41.20 48.41 5586
(8.2) (8.3) (7.7) (7.5) (7.1 ) (6.6)
2. Decennial growth (%) 11.91 14.66 11.85 22.30 17.50 15.39
_. (14.22) (13.31) (21.51) (24.80) (24.60) (23.85)
"-
3. Literacy (%) 16.19 20.85 31.41 39.46 4676 62.66
(16.10) (16.67) (24.02) (29.45) (36.23) (52.21)
4. Density of population (Number per sq.km) 202 232 259 317 372 429
(103) (117) (142) (177) (216) (268)

5. Share of urban population (%) 19.70 2435 26.69 30.26 32.95 3420

6 Annual Growth (%) 2.01 3A9 204 3.27 2.47 176

NB : Figures in parentheses are share. In per cent of Tamil Nadu Population In Country 5 Population.
Source: Tamil Nadu - An Economic Appraisal (TNEA) 1993194, GOTN, Madras.

3
 Parameters of the growth of population such as birth and death rates,
age distribution, sex ratio, fertility status, and health factors are generally
considered for developing population projections. For want of adequate
information on them, it would seem reasonable to assume that the trend of
population overtime would, in a summary way, likely reflect the impact of
. them. This would at best a summary measure, subject to statistical
interpretation, that could be relied up on for population discussions. An
attempt has been made to estimate population for inter - Census years by
projecting the census population estimates. The procedures used for the
estimation involve the following steps.

First, the population of Census years of 1941 through 1991 were

regressed against time variable (T:1941 = 1, 1951 = 2, ..... , 1991 :: 6) and
the estimated regression is set below.

Pop :: 18.2333 + 6.071 T

(11.48) (12.92)
= 0.978
(Values in parentheses are 'f)

Second, annual compound growth rates (CGR) between the decades

are determined and using the estimated eGR, inter-census populations are
estimated and a series of annual population estimates has been constructed
for the period 1941 to 1991 and there on 2001. The estimated population
in 2000 is 59.65 million, and it is 60.28 million in 2001. The estimated
population was compared with the available annual population estimates and
the error status was tested and the estimated error is found to be not
significant.

The other components of human resource development (HRD) are

presented in Table 3. It could be seen that the birth rate declined by
seven points while death rate decreased by three points but, more
significantly, infant mortality rate ha~' dclined from 91 in 1971 to 60 points
in 1991 which, coupled with the increase in expectation of life at birth,
indicate relatively a higher status of wei' being in the country.

The trends in population, food output growth and per capita food
production are summarised in Table 4.

Over the four decades, food production has grown, on the average, at
2.2 per cent per year, whereas population has grown 1.5 per cent pAr year
leading to a growth of 0.8 per cent per year in per capita food production.
The negative growth during the period 1971/81 was mainly due to steep
reduction in output because of the adverse seasonal conditions around

4
1981, as revealed by deeleration of output by 1.6 per cent against the
population increase at 1.2 per cent per annum.

Table 3 : Demographic Attributes of Human Resources in Tamil Nadu

Indicators Years

1971 1981 1991

1. Birth Rate (per WOO) 28 21 21

(34) (29) (29.3)

2. Death Rate (per 1000) 12 9 9

(13) (12) (9.8)

3. Infant Mortality Rate (IMR) 91 57 60

(per 100 live births) (110) (80) (80)

4. Expectation of Life at birth

rJlale 47.5 52.5 57.4

(46.4) (51.4) (54.1)

Female 46.5 51.9 58.5

(44.2) (51.4) (54.7)

Note : Figures in parentheses are the magnitudes for the country

Table 4 : Population and Food Production per capita in Tamil Nadu

Year Population (millions) Food production (m!) Per capita food production
(gm/day)

1951 30.25 3.213 295

1961 36.25 5.380 411

(1.8) (5.6) (3.4)

1971 42.46 6644 436

(1.6) (2.1) (0.6)

1981 48.27 6651 325

(1.3) (-1.6) (-2.9)

1991 54.28 7.496 383

(1.2) (2.9) ( 1.7)

1993 55.43 8.148 408

(1.1) (4.3) (3.2)

1995 I 1993 (1.5) (2.2) (0.8)

Note : The figures in parentheses are the annual compound rates of growth

1.4 Structure of Agricultural Production

i) Farm Structure

Small and marginal farms are predominant in the State and the size
distribution of farm holdings is presented in Table 5.

5
Table 5 Number, Area and Average Size of Operational Holdings In
Tamil Nadu
Classification oj Holdings Number of Operational Operated Average size
Holdings Area of Holdings

Lakhs Lakhs hectares Hectares

1985-86 1990-91 1985-86 1990-91 1985-86 1990-91

1. Marginal (Below 1.0 Ha) 54.98 58.48 20.18 21.18 0.37 0.36
(71) (73) (26) (28)

2. Small (1.0 - 2.0 Ha) 12.60 12.75 17.72 17.94 1.41 1.41
(16) (16) (23) (24)

3. Semi-Medium (2.1 - 4.Q Ha) 6.49 6.18 17.78 16.87 2.74 2.73
(9) (8) (23) (23)

4. Medium (4.1 - 10 Ha) 2.61 2.27 15.08 13.01 5.78 5.72

(4) (3) (19) (17)
5. Large (10 Ha and above) 0.39 0.31 7.20 5.74 18.39 1844
(Neg) (Neg) (9) (8)
Total 77.07 79.99 77.96 74.74 1.01 0.93
(100) (100) (100) (100)
(Neg) - Neyligible
Figures in Brackets indicate percentage to vertical total

Seventy one per cent of the total farm holdings of 77 lakhs in the
State during 1985/86 are marginal farmers having less than one hectare in
size and they operate 26 per cent of the total area of 78 lakh hectares. In
1990/91, the number had increased by two per cent, while the area
operated had also gone up by two per cent, the average size of marginal
rloldings being decreased from 0.37 hectares to 0.36 hectares. Small
farmers, having an area between 1.0 and 2.0 hectares, had a share of 16
per cent in number and 23 per cent of the operated area; and the change
over the two periods are small leaving the average area per capita at 1.41
ha.

Semi-medium and medium farms, lying between 2.0 and 10 hectares

in size, account for 13 per cent in number and 42 per cent in the
operated area with an overall average size of 2.74 hectares whereas the
change over the period have been a drop of two per cent both in number
and area. Large farmers having more than 10 hectares were 0.39 lakhs in
number and 7.2 lakh hectares in area with an overall average size of
18.39 hectares.

According to the inputs Survey (1986/87), the average number of parcels

per holding was 1.5 for marginal farms, and the number increased to 2.4
in small farms, to 3.4 and 5.6 for medium and large farms, with the
average of the parcel ranging between 0.27 hectare and 2.51 hectare for
marginal and large farms, respectively. The predominance of small farms
creates problems ot equity and its consequent issues of access to
technology and the related inputs and services supply. That the changes
over the priod have not been significant reveals structural stabilisation after
land reforms initiated and implemented during the last four decades.

ii) Water Resources

IrrigaHon in the State has a long history for development with great
emphasis on canals and tanks during the earlier period followed by the
development of wells since the forties. For the triennium ending (TE) 1992/
93, the net area irrigated (NIA) was 25.6 lakh hectares of which 32.4 per
cent was contributed by canals, 22.7 per cent by tanks and 44.5 per cent
by ~ells. The change in command areas of these three sources of
irrigation over the past four decades are summarised in Table 6.

Table 6. Sourcewise Area Irrigated in Tamil Nadu : Oecadal Trends

(Lakh hectares)

Source 50's 60's 70's 80's 90's

(1950/51- (1960/61- (1970171- (1980/81- (1990/91-
1959/60) 1969nO) 1979/80) 1989/90) 1996/97)

I Net Irrigated Area

~-

a) Canals 7.92 883 8.94 6.23 8.13

b) TankS 7.76 9.12 8.49 6.16 602

c) Wells 4.97 6.45 918 10.38 12.56

d) Others (springs channels etc.) 0.46 039 035 0.19 0.16

-------~ ---~-----.

Total Net Area Irrigated 21.1 f 2479

_.--_-
26.96 24.96
--
2687
- - - _._---- - - - - - -
II Area Irrigated More than Once C.19
--t--.
7.87 8.26 619
--
626
1-------
III Gross Area Irrigated 27.30 3266 35.22 3115 33.14
--
IV Irrigation DenSity 1290 1317 130.6 124.8 12333
J

Source : Tamil Nadu Economic Appraisal, 1993 and 1998.

The changes are summarised below

NIA was 21.1 lakh hectares in the fifties which were increasing
gradually during the next two decades to be followed by a decline of 7.3
per cent_ during the eighties, and a marginal (4.2 per cent) increase in the
nineties. Sourcewise, during the fifties, there have been massive Investment
in irrigation project and the canal command area had increased from 7.9
lakh hectares to 8.8 lakh hectares in the sixties, and with an increase

7
marginaily during the seventies and a decline of 71 thousand hectares
during the eighties; and tank ayacu\ and declined continuously from 7.8
lakh hectares in the fifties to 5.6 lakh hectares in the nineties. On the
other hand, there have been steady and significant increase in the area
irrigated by wells over the period : Five lakh hectares in the fifties to 12.6
lakh hectares during the nineties. The utilisation of ground water has been
reacN'ing its potentials in hard rock areas of the central districts. The gross
area irrigated follows the trend of NIA and irrigation intensity declined by
around five per cent points over the period.

The pattern of cropping indicates the intensity of land and water use.
Intensity of cropping in irrigated and unirrigated lands was computed as a
percentage of GSA to NSA. Cropping pattern are summarised in Table 7.

In the irrigated areas of 35 lakh hectares of the State, single crop

was raised in 79 per cent of the area whereas cropping was twice in 20
per cent and thrice in 1.0 per cent. Among the various classes, small and
medium farmers had raised single crop in 77.6 per cen~ of the area, two
crops in 21.2 per cent and three crops in 1.3 per cent whereas semi
medium farmers raised single crop in 81 per cent of the area, two crops in
18 per cent and three crops in 0.9 per cent, whereas the corresponding
figures for large farms were 75.2, 23.6 and 1.2 per cent respectively. Under
unirrigated conditions, only 8.8 per cent was sown with more than one crop
in an area of 2.9 lakh hectars and it would be interesting to note that
marginal farmers had highest share (12.2 per cent) and the least (4.2 per
cent) in large farms.

1.5 Sectora\ Deve\opment

The status of development in Tamil Nadu is cast in relation with the

other major State of India in the following table. If one reads down the
column of specified development indictor, the relative pOSition of a State
can be identified. The ranks are sixteen in all and they are assigned to
the State such that higher the rank of a State the more favourably it is
placed and vice versa. Across the columns, a summation assumes equal
weights to the development parameters and the final sum reveals relative
development status and hence the sums are used to rank the States.

It may be seen that Punjab ranks first among the states of India in
economic development, followed by Tamil Nadu but with wide development
distance of 35 points which have, however, been narrowed to less tha.n 10
points among the states of next five ranks viz., between states of Tamil
Nadu, Haryana, Gujarat, Kerala and Maharashtra. Demographic features
such as population growth, literacy and infant mortality are dominant

8
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10
characteristics of development in Kerala whereas literacy and productive
factors have contributed for Haryana development. Relatively, Tamil Nadu
has strong support of demographic determinants which could activate
development, moderate in power consumption, use of bank / institutional
credit, and spread of information through newspapers. Fertilisers have been
used in a large measure and the use of technology is high. However, land
resource is limited eventhough the share of irrigated land has been fairly
high. Forest cover is sparse and qualitatively poor. The share of foodgrains
in total production is small and poverty ratio has been very high. The
policy implications are the need for eHicient management of land and water
resources through technological and institutional support. This would
generate opportunities for income and employment. The supporting activities
come from horticultural, forest and processing sectors which, in turn, warrant
additic;mal agricultural investment in a massive way.

The share of primary sector in NSDP has been declining around two
per cent a year during the seventies and first half of the eighties, and at
:~ss than one per cent in the second half of the eighties and first half of
(he nineties. Overall, the decline in the share of primary sector has been
on the order of two per cent a year. Notably, the share of secondary
sector has been increasing all the periods. There was an increase of 1.3
and 1.2 per cent during the seventies and the first half of the eighties,
followed by decline in the later periods, indicating industrial stagnation in
the State despite liberalisation and privatisation. Similar observations could
be made as the process of transformation has yet to make significant
industrial development at the state level. The share of tertiary sector has
been increasing all the time with varying magnitudes which are modest
ranging over one and below.

The sectoral share of State Net Domestic Product (SNDP} over the
past decade, divided into two five-year segments viz., 1983/88 and 1988/93,
and growth rate are given in Table 9 below.

During the first half (1983/88), the share of primary sector was 26.3 per
cent against 31 per cent and 42.8 per cent in secondary and tertiary
sectors. Tertiary sector has the highest growth rate of 7.6 per cent followed
by 6.8 per cent and 2.4 per cent of primary and secondary sectors,
respectively. Compare this with the national scenarios. The growth in
secondary sector has been relatively higher (6.7 per cent) but its sectoral
share is quite low (24.8 per cent) and the weighted contribution has been
34.2 per .cent. One could note some perceptible changes in the second
half of the decade in the share of primary sector, with the growth of 5.7
per cent, the secondary sector's weighted contribution has risen to 37.3 per
cent and that of secondary sector has daclined by about 16 points.

11
 Table 9 Changes in Sectoral Contribution to Growth of NSDP
(per cent)

Sectors 1983/64 - 1987/88 1988189 1992193

Average Annual Weighted Average Annual Weighted

Share Average Contribution Share Average Contribution
Growth Rate Growth Rate

Primary 26.26 6.77 30.74 23.98 5.71 21.33

(37.37) (1.89) (14.60) (34.26) (5.08) (31.65)

Secondary 30.96 2.38 12.74 31.48 7.61 37.32

(24.61) (6.66) (34.17) (25.61) (5.00) (23.47)

Tertiary 42.78 7.64 56.52 44.54 5.96 41.35

(37.62) (6.55) (51.23) (39.93) (6.18) (44.68)

NSDP 100.00 5.57 100.00 100.00 6.18 100.00

(100.00) (4.80) (100.00) (100.00) (5.46) (100.00)

NB : Figures in ~"rentheses are related NDP (All India)

Source: Tamil Nadu - An Economic Appraisal, 1993.

At the national level, the contribution of primary sector has gone up

from 14.6 per cent to 31.7 per cent whereas the contribution declined to
23.5 per cent and 44.9 per cent in the secondary and primary sectors.
Within the primary sector, agriculture and allied activities have slowed down
in growth, but forestry and logging, and fisheries have shown increase in
growth rates. Significant growth has been observed in registered
manufactures and construction in secondary sector; and in tertiary sector
gro~ has been noted in storage and other services. Overall, the State
COuld claim third rank in the nation for agricultural performance and fourth
in industrialisation.

The trend in the sectoral income is estimated by a set of regressions

specified. The estimated equations are given below.

Primary : In y = 6.6665 + 0.00037 PI, + 0.0552 T

(4.275) (6.428)
R2 = 0.97, F = 527.4

Secondary : In y = 6.8359 + 0 00030 SI, + 0.0500 T

(b.536) (6.553)
R2 = 0.97, F = 661.2
Tertiary : In y = 6.7458 + 0.00010 TI, + 0.0697 T
(2.406) (7.743)
R2 ::: 0.96 F = 392.5

12
Where Y - SNDP in crores of rupees

PI, SI, TI - Primary, Secondary and Tertiary sectors of SNDP

T - Time (T 1960/61 == 1, ..... , 1994/95 =35)

The growth rates of sectoral income are 5.5, 5.0 and 7.0 per cent for
primary, secondary and tertiary sectors, respectively. There have been
differential sectoral shares and growth over different decades which have
been analysed and discussed. The analysis of the inter-sectoral income
variations shows that there have been secular decline in the share of
primary sector income over SNDP, and also there have been continous
increase in the share of tertiary sector. Nevertheless, one can not be sure
of structural changes the development theory argues about since there has
been no stable increasing trend in the changes of share in the secondary
sector. The focus of development would seem to warrant development of
industrial and manufacturing bases through concerted investment and
entrepreneurial efforts which are at best said to be tenuous and uncertain
under market-driven economic growth and development.

1.6 Capital Formation

The rate of capital formation depends on investment intensity which in

turn is determined by the rate of saving and expected return to investment.
Captial is provided by public and private sectors and in agriculture,
investment in land, farm assets, and inputs and intermediate products are
provided largely by private sector individually by farmer himself or
parastatals and financial agencies. Public sector investment covers
infrastructural facilities such river dams, irrigation network, marketing and
stoage, roads and communications, research, training and development in
farm related problems. Thus, productive capacity of agriculture is facilitated
through capital formation.

According to a definition by the U.N. Statistical Office, domestic capital

formation as a part of current output and imports which is not consumed
but set apart as addition to the stock of capital goods. This is gross capital
formation and by deducting from the amount. toward depreciation,
obsolescence and accidental damages to fixed capital, net capital formation
is calculated. All goods produced for use in future productive processes
s:.Jch as plants and maChinery, farm land, barn and other construction
works, production of stock of raw materials, semi-finished goods are
classiffed as capital goods. Among the three methods of gross capital
formation, the expenditure method' is adopted for estimating the capital
formation at the state level. The estimates for Tamil Nadu are available for
the period from 1980/81 to 1989/90 and they are summarised in Table 10.

13
The gross fixed capital formation, at current prices, has been Rs. 1543
crores in 1980/81 which has increased to RS.5584 crores in 1988/89 with
the mean of Rs. 3166 crores and CV of 37.6 per cent, and annual growth
of 15.4 per cent. The GFCF in Primary sector has increased form RS.176
crores (1980/81) to Rs.912 crores (1988/89) with a mean of Rs.439 crores
and CV of 46 per cent. The growth is 20.0 per cent a year and only 6.4
per cent in agriculture. In the secondary sector it varies between As.732
crores and RS.2899 crores with the mean of RS.1590 crores. CV of 41.7
per cent. and growth of 16.5 per cent a year; and in the Tertiary serctor
the range of GFCF is between RS.636 crores and RS.1773 crores with the
mean of RS.1137 crores, CV of 30.2 per cent and growth of 12.1 per cent
a year.

Table 10 : Sectorwise Gross Fixed Capital Formation (1980/81 - 1988/89)

(At Current Prices in As. Crores)

Years Primary (Agriculture) Secondary Tertiary Total

1980181 176.2 96.6 732.1 635.6

(11.4) (6.3) (47.4) (41.2) 1543.3
1981/82 270.1 133.6 1058.7 797.2
(12.7) (63) (49.8) (37.5) 2126.0
1982183 411.4 137.1 1063.2 903.7
(17.3) (5.8) (44.7) (38.0) 2378.3
1983/84 246.7 122.2 1098.2 952.9
(10.7) (5.3) (47.8) (41.5) 2297.7
1984/85 479.7 152.5 1554.9 1041.1
(15.6) (4.9) (50.5) (33.9) 3081.7
1985186 476.0 161.2 1573.':: 12515
(14.4) (49) (47.7) (37.9) 3301.0
1986187 493.1 187.7 2019.9 1396.6
(12.6) (48) (51.7) (35.7) 3909.5
~

1987/88 489.4 214.1 2307.9 1473.6

(11.5) (5.0) (54.0) (34.5) 4271.0
1988/89 912.0 169.4 2899.2 1772.8
(16.3) (3.0) (51.9) (31.8) 5584.1
Mean 439.4 t52.7 1589.7 1136.8 3165.8
cv 46.0 21.\1 41.7 30.2 37.6
Growth 200 6.4 16.5 12.1 15.4
Note : Figures In parentheses are percentages 10 lolal
Source: Director 01 Statistics, GOTN, 1995.

Among' the components of primary sector, agriculture is a major

subsector whose share of GFCF of the primary sector varies between 54.8
per cent (1980/81) and 18,6 per cent (1988/89). The annual variations do
not show any trend. The mean GFCF is RS.153 crores, CV is 21.9 per
..
14
cent and growth rate is 6.4 per cent a year. The other sub sectors with
substantial shares are fisheries, and mining and quarrying. The agricultural
sources of capital is the extremely low in capital formation inspite of
significant increment in productivity which could be explained partly as a
result of fow administered prices and consequent stagnation in farm real
income. Lack of infrastructure for risk management retards the pace of
investment flow in agriculture. It may be noted that the share of agriculture
in the total GFCF in its best year has been only three per cent. The best
ratio for GFCF in agriculture at the beginning of the decade was fluctuating
around five per cent.

Very recently, capital has been flowing into agriculture and horticulture
sectors for investment in teak and horticultural crops with improvised micro
irrigation systems to minimise seasonal uncertainties which have the
stumbling block for significant investment. The role of corporate sectors and
that L>f parastatals such as NABARD, National Horticulure Board and Banks
and other financial institutions are being accepted and their activities are
gaining grounds steadily, but yet to make significant strides. A notable point
is that a new flush of investment has started flowing and the trade and
markets are there under the NEP to support the new investments
particularly, marketing infrastructure such as processing, packaging and
shipment would add the much needed technical and investment support. In
the context of skewed distribution of farm holdings and the need for
oountervailing support and provision of safety net, the relevance ot the old
orthodoxies emphasising on an active participation of the parastatals is no
less significant. We turn to them to study their roles, function and
performance.

1.7 Poverty Scenario

Poverty is relatively large in the State even though the sectoral

performance has been fairly good and this could be for the reasons of the
excessive dependence of the population on agriculture for employment and
income. The poverty scenario in the State is depicted in Table 11.

It may be seen that, between 1972/73 and 1987/88, the estimated

poverty ratio has declined by 23 percentage points in rural sector and by
31 percentage pOints in urban sector, and 27 pOints for the combined
sector in all. The Expert Group, appointed by the Planning Commission,
has estir]1ated poverty ratios taking into consideration the prices prevailing in
the state and the estimates show consistent downward bias when compared
with the early estimates for the year 1972/73 and upward bias in the rest
of the years. The distanc~ of the poverty ratios between rural and urban

15 I UN,'"
., - . ,.
sectors has been widening continuously from 11 in 1972173 and 1977178 to
13 and 19 in subsequent years. There had been steeper decline in the
estimated poverty ratios in urban sector than that in rural sector. Poverty
alleviation programmes (PAP) and employment assistance programmes
(EAP) were launched as direct intervention and the progress and
performance have been reported as mixed due to many reasons of which
political interference and lack of user participation are important.

Table 11 : Poverty Status In Tamil Nadu

(In per cent)

Year Charges

Segment 1972/73 1977(18 1983184 1987/88 (3)-(2) (4)-(3) (5)-(4)

(1 ) (2) (3) (4) (::;) (6) (7) (8)

Aural 63 56 44 40 -7 -12 -4
(57) (58) (54) (46) 1 -4 -8
Urban 52 45 31 21 -7 -14 -10
(54) (53) (49) (44) -1 -4 -5
Combined 60 53 40 33 -3 .13 -7
(57) (56) (52) (45) -1 -4 -7

NB : The Poverty estimates by the Expert Group are given in parentheses.

1.8 Regionallsation

The Planning Commission of India has introduced a new paradigm for

agricultural planning and launChed a project of Agro-Climatic Regional
Planning (ACRP). In the first phase, the country was divided into 15 agro-
climatic zones and for each Zone, Zonal Planning Team (ZPT) was formed
under the chairmanship of Vice Chancellor of Agricultural University. The
ZPT examined the resource base and activity sets pertaining to agriculture,
animal husbandry, forestry, horticulture, sericulture and fisheries and
formulated resource-based and technology oriented development plans. As
a furthef refinement, the 15 zones were further divided into 74 sub-zones
and later, these sub-zones were delineated in conformity with state
administrative boundaries and the state sub-zones became 82 in number.
Decentralised planning for agriculture is being attemptAd in selected districts
in the second phase.

Within the framework of ACAP, Tamil Nadu State is divided into

seven distinct regions as listed below.

16
State-region Districts
I Salem, Namakkal and Dharmapuri

II Erode, COimbatore, Madurai, Dindigu', Theni Thiruchirappalli,

Karur, Perambalur and Pudukkottai

III Kancheepuram, Vellore, Thiruvallur, Thiruvannamalai and

Cuddalore Vifuppuram

IV Thanjavur, Thiruvarur and Nagapattinam

V Sivagangai, Virudrunagar, Ramanathapuram, Thoothukkud:

. and Tirunelveli

VI Kanyakumari

VII The Nilgiris

The regions are delineated on the basis of land and water resources,
rainfall and climatic conditions.

It may be noted that nearly sixty per cent of the total number of
holdings is concentrated in Region " (Central districts) and Region III
(Northeastern districts). Large holdings, exceeding 10 hecatares in extent,
are in Region II (43.5 per cent), Region III (15.3 per cent) and Region V
(20.7 per cent). Small and marginal holdings show similar patterns of
concentration. The distribution of area reveals similar patterns.

a) Land : Seven types of land uses such as forests, land that is not
available for cultivation (LNAC), land that is available for cultivation (LAC),
net shown area (NSA), fallows and wastelands. are considered to analyse
the pattern of land utilisation (vide Table 12).
The total forest area of State is 21.5 lakh hectares of Which 82 per
cent is concentrated in Regions I, " and III. The lands that are not
available for cultivation cover 23.6 lakh hectares and nearly 60 available
per cent are located in Regions II and III, supplemented by another 21 per
cent in Region V. The same regions account nearly 80 per cent of land
available for cultivation and 90 per cent of fallows. Net sown area has
been fairly distributed among the regions though the peaks are found in
Region " and III. In all, 13.6 lakh hectares are classified as waste lands in
the State and the maximum area (39 per cent) is found in south eastern
region (Region V), followed by Region II (34 per cent) and Region III (16
per cent) which would mean that land development projects, should better
be taken up in these regions in the first phase.

17
Table 12 Variations in Land Utilisation by State Sub-Reg ions-Tamil
Nadu 1992-93
('000' hal

Forests LNAC LAC Fallows NSA Wastelands

Regions ._-
I 542.75 232.73 72.21 118.88 85881 69.67
(25.2) (9.9) (11) (5.9) (148) (51)
----.--

II 778.53 712.22 153.35 804.25 1979.78 456.45

(36.2) (302) (234) (400) (341) (337)

III 431.25 6999~ 178.13 406.68 1383.28 217.14

(20.1) (29.6) (27.14) (202) (23.8) (160)
f--
IV 120.17 192.84 3939 64.73 512.14 71.32
(0.6) (8.2) (6.00) (3.2) (8.8) (53)

V 193.59 485.85 201.83

598.46 920.71 528.73
(9.0) (20.6) (30.8)
(29.7) (15.8) (39.0)
._---- I-------~- f . - - - - - - - '---------- - - - - - _..-
VI 49.37 27.42 0.16 322 8641 2.63
(2.3) (12) (012) (0.2) (1.5) (02)
--- .. -- ----.----.~- -- .. _------ --~----~.--- --~---------
.... --- .. _._ .. -
VII 143.36 11.46 10.61 16.54 7241 9.32
(6.7) (05) (1.6) (0.8) (1.3) (07)
-+--------- t----------
Total 2150.87 2361.8 656.29 2012.77 5813.54 135526
(100) (100) (100) (100) (100) (100)

Earlier, a comparative analysis between two periods viz: TE 1958/59

and TE 1991/92, was presented in the document, "Development Strategies
for Agriculture in Tamil Nadu" and its salient findings (CARDS, 1996) are
summarised below. Between the two periods, net sown area has decreased
by 1.1. lakh hectares in Region II followed by 1.48 hkh hectares in
Regions IV and V whereas there has been an increase of 0.9 lakh
hectares in Region I. Current fallows of the State have increased by 3.6
lakh hectares, the maximum increases in Region II and minimum in Region
IV. Percentwise, the maximum decline is in Region VI and the maximum
increase in Region V. The intensity of cropping, measured as per cent ratio
of GSA to NSA, has been maximum of 150 per cent in TE 1991/92 in
Region IV, around 125 per cent in Regions I, III and VI where there have
been significant reduction in current fallows.

b) Water : Regionwise distribution of area and distribution of the

sources of irrigation is presented in Table 13.

As could be seen from the table, canals are predominant in Regions

II and IV covering nearly three-fourth of the canal command of NIA
whereas tanks are important in Regions III and V accounting for 74 per
cent of tank ayacut. Wells have 88 per cent of NIA in Regions I, II, and
III. Problems of irrigation management and their technical and managerial

18
solutions differ in their own context and component strategies. Further, the
types and sources of irrigation influence farming system and cropping
patterns of the regions.

Table 13 : Distribution of irrigation by state Sub-Regions in Tamil Nadu

('000 hal
Canals Tanks Wells

Regions Net Area Gross Area Net Area Gross Area Net Area Gross Area
Irrigated Irrigated Irrigated Irrigated Irrigated Irrigated

I 26.07 34.22 21.34 25.98 206.14 273.55

(3.1) (3.3) (3.5) (3.6) (17.4) (185)

II 296.83 367.95 116.82 123.86 355.49 373.05

(35.0) (35.0) (19.4) (17.4) (30.0) (25.2)
I
III 70.50 82.50 214.00 276.61 475.73 662.57
(8.3) (7.9) (35.5) (38.8) (40.2) (44.8)

IV 420.64 51184 5.47 5.47 23.86 33.02

(49.6) (48.7) (0.9) (0.8) (2.01) (223)

V 22.12 36.45 229.28 253.3 121.71 1366.65

(2.6) (3.5) (38.0) (35.5) (10.3) (9.2)

VI 10.87 17.62 15.98 28.00 1.22 1.66

(1.3) (1.7) (2.7) (3.9) (0.1) (0.1)

VII 0.44 0.44 - - 0.03 0.03

(0.10) (0.04) (0.002) (0.002)

Total 874.46 1051.01 628.75 713.23 1184 16 1480.55

(100) (100) (100) (100) (100) (100)

c) Labour : Regionwise distribution of workers given in Table 14.

According to Census 1991, total workers are 230 lakhs and around 60 per
cent of them are concentrated in Region II and III. Main workers are 216
lakh and have been concentrated in the above two regions. Marginal
workers are 14 lakhs and their concentration' is in Region II, III and IV.

d) Output : The quinquennial average of foodgrain production for the

period ending 1993 is 78.7 lakh tonnes for the state and regionwise,
Regions II, III and IV account for 75 per cent of state food output. Canals,
wells and tanks localise foodgrain production. The distribution of nutrients of
fertilisers indicates similar concentration.

The average nitrogen (N) used is 4.30 lakh tonnes per year of which
77 per cent is used in Regions II, 111 and IV with the nutrient per hectare
ranging - between 70 and 85 kg/hectare. Nearly 1.6 lakh tonnes of P 0
(Phospherous) are used on the average in the State, with the StatJ
average being 24 kg/hectare. The variations are from 14 kg/hectare in

19
Region I and 31 kg/hectare in Region VII and 18 kg/hectare in Region I.
Plant protection measures to control diseases and pests indicted that
disease control has been attempted in 21.6 lakh hectares of which Regions
II and III have 62 per cent share, followed by Region V. Pest control is
taken up, on an average in 57.8 lakh hectares. Sixty per cent of the area
is in Regions II and III, and 27 per cent in Regions IV and V.

Table 14 : Regionw;se Distribution of Workers by

State Sub-Regions - 1991 Census
(in '000')

Regions Total Workers Main Workers Marginal Workers -

I 3074.9 2873.4 201.4
(13.4) (13.3) (14.5)

II 7686.4 7309.7 376.7

(33.4) (33.8) (270)

III 6057.7 5673.6 374.1

(26.3) (26.3) (26.8)

IV 1838.8 1705.1 133.7

(8.0) (7.9) (9.6)

V 3586.6 3310.4 276.1

(15.6) (15.3) (19.8)

VI 488.1 464.1 24.0

(2.1) (2.2) (1.72)

VII 288.9 281.1 7.8

(1.3) (1.3) (0.6)
Total 23021.3 21627.3 1394.0
(100) (100) (100)

1.9 Development Focus

Liberalisation and structural adjustment programmes under the New

Economic Policy (NEP) have brought new winds of change into agriculture.
Agricultural productivity in the State has been high under irrigated
agriculture, ranking perhaps third after the states of Punjab and Haryana,
but it is far below under the rain-dependent dry land farming. At the same
time the utilisation of land and water resources is much to be improved
and their use pattern drastically altered. Focus on agricultural tradables,
substitution by high value crops and value addition in processing would call
for new policy deSigns and system strategies for agricultural development in
the State. Recently, the State government has formulated its agricultural
policy the major components of which may be listed as below:

20
 Increase of foodgrains produCtiOtl and productivity to ensure - self
sufficiency in foodg'rains " ,':

Identification of untapped key potential areas for agricultural development

and to attract capital investment

Development of degraded lands and maintain ecological balance

Promotion ot rainted horticulture and dry land agro-torestry

Control and management of depleting water levels in the State and

develop suitable watershed management strategies into integrated modules

Promotion of horticulture and other activities allied to agriculture through

com'mercialisation and diversification

Development of agri-business and agro-processing

Strengthening credit flows to finance development

Technological backup for a broad based extension

Problem solving and location specific research which is oriented toward

land and water resource use and management with special emphasis on
rainted agriculture, horticulture, agro-processing, water management, farm
mechanisation

Agri-business and agro enterprise oriented agricultural education

Farmer participation in common property resources management

Promotion of Non-Government Organisations (NGO) for implementation of

agricultural and village development programmes

Promotion of edible oil production

Promotion of women in agriculture

It would therefore seem important to examine carefully the structure of

agricultural production and it strategic components, the linkages between
land and- water resources and the potential of their integration into an
optimum mix which maximises regional and State income, The objectives
can be stated as:

21
 i) to study the changes In the structure of agricultural crop production,
output and growth,

ii) to examine crop based farming systems across the regions, identify
their major components and evaluate their linkages with productivity
and employment, and

iii) to develop an integrated perspective of development issues and

problems, policy options and intervention strategies, and to examine
decision criteria and operations through interaction with farmers,
financial institutions, development agencies and administration.

1.10 The Design of the Study

The design has two parts : one, to collect information available

through secondary sources such as guvernment reports and publications,
journal articles and books, and mimeographed materials, and two to collect
information from farmers, development agencies and other institutions
through personal contacts and discussions. A structured interview schedule
has been designed for collecting information of cost and returns from the
sample farmers. In all 22 blocks, 44 villages and 396 sample farmers are
involved in the study. The data are processed using the available computer
package.

The secondary sources of data include various issues of Tamil Nadu

An Economic Appraisal (TNEA) by Evaluation of Applied Research Basic
Statistics for Agriculture and various issues of season and crop report
issued by Director of Statistics, by the Government of Tamil Nadu; Report
on Development Strategies for Agriculture (1994) and various reports issued
by Centre for Agricultural and Development Studies (CARDS), Tamil Nadu
Agricultural University and Agrostat 94 and Crop Production Manual (1994)
issued by Department of Agriculture.

22
 CHAPTER II
RESOURCE ENDOWMENT

2.1 Land Resources

The land use pattell1 and it's changes over time (1950/51 to 1992/93)
in the State are summarised in Table 15.

Tamil Nadu is one of the land-starved states of India with per capita
availability of land at the base year (1950/51) being 0.439 hectares whi~h
has been declining all along to 0.235 hectares in 1992193 at 1.5 per cent
per annum. More significantly, it is seen that per capita net sown area
(NSA) has also declined to 0.105 hectares in 1992/93 as against the base
yeqr area of 0.174 hectares, at the rate of 1.2 per cent per year.
Interestingly, the corresponding increase in population has been 1.5 per
cent.

i. Land Use Pattern

The pattern of land use has shown changes overtime and to analyse
these changes, the conventional nine-fold land use classification has been
modified and compressed into a five-fold classification and the land-use
data are presented in Table 16.

There have been an addition of 3.4 lakh hectares to the area under
forests during the period with a growth of 0.4 per cent a year while its
share in total geographical area has also increased by 2.5 per cent points
from 14 per cent in the base year. There have been conscious efforts to
upgrade the forest in the State in quantitative and qualitative terms. New
innovative programmes such as farm forestry, social forestry and others
have been introduced.

Net sown area (NSA) has been fluctuating over the period depending
mainly on the changing weather condition but, however, due to new
investment in land development including reclamation there have been
increase NSA by 6.6 lakh hectares or a growth of 0.3 per cent per annum
over the period. The increase has been supported by reduction of 7.3 lakh
hectares in cultivable waste and 2.5 lakh hectares of permanent pastures.
The stability in net sown area could be seen under irrigated conditions as
evident in the behaviour of gross sown area (GSA) and cropping intensity.

The prospects of increasing NSA are conditioned by the availability of

lands for development for cultivation. The lands available for cultivation
include cultivable wastes, permanent pastures and miscellaneous trees: and
current and other fallows. TI18se types of lands together constitute a pool

23
of land resources from which supplies of land are drawn for other non-
agricultural uses. More significantly, the area under cultivable wastes and
other fallows indicates the potential for reclamation and land development.
Equally significant is the fact that such an area has remained uncultivated
because the cost of development is relatively very high; second, these
lands may be so degraded and poor in quality that would require special
or large investment and technology. The NSA growth relatives show an
increase of 13 per cent points over the base year.

The lands that are not available for cultivation (LNAC) include those
which are barren and uncultivable, and those under buildings, highways,
parks and water ways. They are outside the agriculture and the demand
for them is likely to expand as urbanisation proceeds and its attendant land
needs for construction assumes importance. In fact, approximately, one lakh
hectares of lands have been added to this pool over the four decades of
development. In Tamil Nadu, a special legislation has been enacted
requiring prior approval of the Department of Agriculture for converting farm
crop lands into residential area and other non-agricultural uses. By
development logic one could not avoid such a process of regulation and
zoning but much could be gained if attempted innovatively with vision. Part
of lands that are available but not under cultivation could be used for this
purpose through rational zoning.

The lands that are available for cultivation (LAC), which includes
culturable wastes and current fallows, are due to deferred uses of lands,
deferred for want of investment funds and because of high costs of
development. Most of these lands are in public domain being cared less
which could be brought under cultivation. Waste and degraded lands occur
as a result of physical and chemical attributes of soils, lack of appropriate
soil and water management methods. topography and gradients. During the
period under study, there have been continuous withdrawals from this land
pool amounting to nearly ten lakh hectares, part of which (6.6 lakh
hectares) has gone to NSA. Noting that around 50 per cent of NSA is dry
and unirrigated that depends exclusively on rains, the development of land
should have been considered with decentralised focus and a regionalised
approach for which sub-regional analysis is necessary.

Forest area is low in the coastal districts and the adjacent district of
Thiruchirappalli, and medium to high in the districts bordering and stretching
over the Western and Eastern Ghats. NSA is low in Chinglepet, Sivagangai
and Thoothukkudi Districts and high in the Cauvery delta; and the adjoining
South Arcot and Ramanathapuram districts where tank irrigation dominates
and when the forest area and NSA are considered together, it could be
noted that high forest and high NSA is seen in Kanyakumari, high NSA

24
...
~ ~mln
o
~~~
c
.2
....
.~
5 I-----I~--__+---_+__---j_-- - -- - +----f------1r--+---l

"'0
c
~

...
U')

_S

25
and low forests occur in the coastal districts, and low NSA and high forests
in the Ghats region whereas the centml districts show medium level of
forests and NSA.

NSAILAC Low -4%) Mediuni (48%) High (>8%)

Low 40%) NAA CHP. TMS. PMT. NGR TKB. CDR

~- ---------~--~-- --~ ~-

Medium (40-50%) DPI. CBE. PER. MDU. DIA PDK

KAM

High (>50%) RMD, KKI SAL. SAY, TPI, TNJ, NGP

ii) Land Available for Cultivation

When that land available for cultivation (LAC) is considered, one can
note that Tirunelveli, Chidambaranar and Ramanathapuram indicate high
LAC but with rainfed lands exceeding 60 per cent; low LAC in the central
and south eastern districts where irrigation is by wells, tanks and canals;
and the scope for utilising LAC substantially exists in the north eastern and
southeastern coastal districts. The major strategy would be to improve the
structure, and management of irrigation sources such as tanks and wells.

NSAlWL Low 5%) Moidum (515%) High (>15%)

- - - - - - - - - - ---c---------
Low 40%) NAA CHP. TMS, PMT, NGR TKB, CDR
- -~~- --~-.~--~------ ---------------
Medium (40-50%) DPI, CBE, DIA, PDK, MDU, PER KAM
~--------- -------------~ --~-- .-- ------- ------~------t_--~.--

High (> 50%) SAY, SAL, KKI TNJ, NGP, RMD TPI

iii) Wastelands

Waste lands and fallow lands indicate the potential for land
development in the State. The distribution of waste lands indicate they are
large in the south eastern coastal and Tiruchirappalli districts and when
considered with the distribution of LAC, the conclusion would be for the
development of waste lands through improved irrigation sources and
management of watersheds; low and mid level availability in the central
districts where ground water utilisation is fairly high, would need treatment
of rainted lands tor in situ moisture conservation and watershed modes of
development; and in the coastal districts for which treatments of problem
soils and for impeded drainage would be necessary.
NSAIFaliow Low 10%) Medium (10-20%) High (>20%)
1 - - - - - - - - - - - - + - - - - -------- ------.--- -- -- --- ------- -- - - - t - - - - - - - - -
Low 40%) NGR VQC, CHP, NAA, TMS, PMT, TKB
I--__:__--'--_:_~_.--~-- - ---- - - - - - --.~ -- ----~.----- -- --- - - _ . _
Medium (40-50%) DPI CBE, MDU, DIA PER, KAM, PDK
I----~---------r___----- --- - - - - - - -..- ~----f___- - .--~~ - . - - - - - - .
High ~ 50%) SAV,. SAL TNJ, NGP, KKI TPI RMD

26
 Abbreviations of the Districts of Tamil Nadu (Used In the study)

1. Madras - MAA
2. Chengelpattu (Kancheepuram, Thiruvallur) - CHP ,KPM,TVL
3. South Arcot (Cuddalore, Villupuram) - SA, CUD, VLP
4. North Arcot (Vellore) - NA, VEL
5. Thiruvanamalai - TMS
6. Salem and Namakkal - SAL, NAM
7. Dharmapuri - DPI
8. Coimbatore - ceE
9. Periyar (Erode) - PER, ERD
10. Thiruchirapalli, Karur and Perambalur, - TPI, KAR, PBL
11. Pudukkotai - POK
12. I Thanjavur, Thiruvarur and Nagapattinam - TNJ, TVR, NGP
13. Madura;, Then; - MOU, THN
14. Dindugul - OIA, OGL
., '). Ramanathapuram - RMD
16. Pasumpon Muthuramalingam Thevar (Sivagangai) - PMT, SVG
17. Kamarajar (Virudhunagar) - KAM, VAN
18. Tirunelveli - TIN
19. vac Chidambaranar (Thoothukkudi) - CSR, TTK
20. The Nilgiris - NIL
21. Kanyakumari - KKI
Note : 1. Used for the two names interchangeably. unless stated otherwise. This does not include the latest
division of districts ordered by GOTN in August. 1996 and 1998 for want of information for the
partitioned area.

The distribution of fallow lands follows similar patterns. With high NSA
in South Arcot Vallalar, Salem, Pudukkottai, fallow lands in these districts
have been low; and contrariwise. high fallows are observed with low NSA
in Kancheepuram, Cuddalore, Vellore, Thiruvannamalai, Sivagangai and
Tirunelveli districts. The districts with medium NSA and fallows that could be
quickly developed through additional investment and organisation are
Coimbatore, Madurai and Oindigul and which have high concentration of
non-food and high value crops. They are mainly hard rock areas and
ground water utilisation reaching high degree of extraction and therefore,
efficient use of ground water through micro irrigation technologies, in
conjunction with land development, becomes highly relevant and imperative.

iv) Land Development

Land development involves two !Jrocesses; one, of a quantitative

dimension to improve physical conditions of land through leveling, draining
and bundling such that the lands can be brought under cultivation, and

27
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28
two, a qualitative one to treat and reclaim chemically affected soils that are
saline, alkaline and sodic through soil treatment and soil structural
improvement. The State has been focusing on land development with the
above two processes. The on going land development programmes are:

i. Soil and water conservation

ii. Waste land development
iii. Reclamation of alkaline and saline lands
iv. Development of rainfed lands.

Soil erosion .depletes soil fertility and the size of damage depends
upon slope of land and intensity of rainfall, besides soil cover. Around 38
lakh hectares of lands in the State are subject to soil and water erosion
and' so far 16 lakh hectares have been treated with soil conservation
measures such as bundling, terracing. live bundling with vetiver and
grasses, and broad beds and bunds. Up in the hills soil conservation
involves building contour stone walls, disposal drains, staggered trenches
and others which would need an investment of Rs.20,000 to 25,000 per
hectare. Private investment is possible as there are plantation crops and
what seems relevant is provision of credit by financing agencies, and
techniques by R&D institutions. Programmes such as Hills Area
Development Progr2.mme could be operationally designed to meet the needs
of soil and water conservation.

There are about 14 lakh hectares of land that could be classified as

waste lands and they are less productive and more risky for investment.
Development of these lands requires land shaping, leveling, bunding and
soil fertility improvement. With an outlay of Rs.250 lakhs which includes a
provision of Rs.150 lakhs as subsidy at the rate of Rs.1,500 per hectare,
land development was taken up in eight districts in 1990/91 to cover an
area of 10,000 hectares. In the second phase, it was extended to another
six districts to cover an area of 5,000 hectares with a financial outlay of
Rs.125 lakhs, inclusive of Rs.75 lakhs as subsidy. For the year 1995/96, a
proposal to include another six districts to cover an area of 8,530 hectares
with an outlay of Rs.15.82 crore is under consideration.

One could note that against an extent of 14 lakh hectares of waste

lands the present coverage of 24 thousand hectares is too small and at
this rate it would perhaps take around 60 years to bring the wastelands in
the State for cultivation. Support from financial institutions and corporate
sector should be mobilised. This would ~all for a review of the land reform
policy and the measures taken up so far and examine the alternatives for
providing incentives for private investment. Furthermore, waste lands lay in
scatters, spatially discontinuous which create a lot of organisational and

29
management problems. Grassroot level organisations such as village
panchayats, non-governmental agencies and other organisations have to be
involved in identification of waste lands and planning for their development.
Consolidation of land holdings through exchange on sales or transfer would
facilitate development of wastelands Moreover, issues related to the
utilization of developed lands, decisions on their allocation among crops,
including fruit trees, forage crops and fuel trees, need to be decided by
local groups that matter.

Saline and alkaline lands account for 3.2 Io.kh hectares or 23 per cent
of waste lands or 2.5 per cent of total area. They are concentrated along
the coastal belt around irrigated area with impeded drainage, and high salt
concentration and they are held both in public and private sectors. The
popular method of treatment of saline and alkaline soils is the use of
gypsum, draining of salts down, and liberal dose of green manure such as
daincha and adoption of saline resistant crop varieties. What seems serious
is the lack of the basic information about soil properties and inadequate
organizational back up to manage them and the use of inputs and
services. The experiment at Manikandam, Tiruchirapalli district, under the
Agro-climatic Regional Planning Scheme, for saline soil reclamation indicate
the preference for local organization with the technical back up from TNAU
and Department of Agriculture of the State Government.

v) Watersheds

The focus of watershed development is on the optimum utilisation of

land and rainfall the latter being stochastic in its occurrence and distribution.
Therefore, harvesting of seasonal rains through storage and utilisation of
rain water in situ becomes the central activity around which crop and its
allied activities are integrated. Building check dams, tanks - percolation and
storage, land leveling, use of draught power and agricultural implements are
the major components of watershed development and these types of tasks
involve multi-agency and multidisciplinary efforts with active participation by
the resident farmers who are the likely beneficiaries of the project. There
are three major watershed development programmes in progress in the
State. The first one is the National Watershed Development Programme for
Rainfed Agriculture (NWDPRA) which is implemented in 14 districts covering
an area of 90,000 hectares with a total outlay of RS.35.61 crores for a
period of five years. For actual implementation, one watershed with an area
of 1000-1200 hectares has been selected from each block. The programme
is expected to generate models of development of rainfed agriculture which
could be extended to other area.

The second one is, the Integrated Watershed Development Programme

30
with the support of World Bank, with the financial outlay of Rs.17.37 crores
over a period of seven years form 1991-92. The programme covers Palar
and Vellar watersheds, each with an area of 26,000-28,000 hectares. The
other component is the watershed extension programme introduced in 12
districts over an extent of 3,000 hectares in each district. The third
programme covers watershed development projects under DPAP with an
outlay of RS.14.7 crores for 72 projects in 13 districts.

The concept of watershed development has the premise that rainted

agriculture is a complex venture straddled with risks and uncertainties and
therefore dry land farmers should be helped initially with significant dose of
investment by the government, to be pursued thereafter through private
investment anc support to sustain the accessed capacity to farm and
survive. There is an urgent need to breakthrough the departmental/
disciplinary boundaries and barriers, and coordinate the activities at the level
of watershed. There seems a long way, fortituous indeed to go if one
examines the progress and approaches. There can not be one-time
investment and touch and go game and it should be designed for long
term growth for which a special institutional support would be necessary to
facilitate continuous monitoring. evaluation and mid-term correction. The
present arrangements on watershed planning and development are disparate
and conflicting with limited participation by farmer beneficiaries. Even the
non-government organisations selected for the purpose are ill equipped and
inefficient to carry out the integrated watershed development programmes.
The recent 73rd Constitutional Amendment which empowers Panchayat Raj
institutions for effective participation in local planning and development
programmes would seem to offer a good scope and yet these institutions
must enjoy technical back up.

2.2 Water Resources

i) Irrigation

Irrigation is one of the production processes by which the stored water

resources are utilized for the growth of crop plants in their production. The
water resources are stored over the land in dams, reservoirs, tanks and the
like commonly called as surface storages while the water resources stored
below the land through infiltration of rain water and other surface flow and
lateral movements form ground water. The surface storage is thus a
production infrastructure for which public investment is preferred. Ground
water has to be pumped up for irrigation which require investment, largely
private, in pumps and other equipments. Ground water equilibrium is
maintained through keeping static water level by drawing water such that
the drawal equals infiltration and recharge; and when the former exceeds
,
31
the later it is over-exploitation or mining of water and while the latter
exceeds the former it is under utilisation of ground water. The sources of
surface irrigation are subject to the control of public organisations/institutions,
and their management determines its use efficiency whereas ground water
use is generally determined by private/individual decisions.

For the triennium ending (TE) 1983/84, the State had 25.3 lakh
hectares of NIA which had increased by 1.2 per cent to 27.6 lakh hectares
in TE 1992/93. Gross irrigated area (GIA) had increased at the same rate
from 31.4 to 33.9 lakh hectares during the same period. The corresponding
irrigation intensities are 1.24 and 1.32 for the two periods, respectively.
Among the districts, Thanjavur had the maximum area of 4.6 lakh hectares
under NIA followed by South Arcot, Madurai, Chengalpattu and
Ramanathapuram which together accounts for 56 per cent of State NIA.
There have been only marginal changes for the TE 1992/93. Similarly,
there have been no significant changes between the two triennia in
irrigation intensities. The inter-district variations in NIA are very high with CV
being 63 per cent, whereas for GIA it is 67 per cent (TE 1993/94) (Table
20). If one considers the sourcewise components of NIA such as tank and
canal systems the variations could have been much higher. The basic
element is, however, rainfall, seasonal distribution and consequent run off.
Tamil Nadu has all the three sources of irrigations viz., canals, tanks and
wells and their share in net sown area irrigated (NIA) varies over the past
40 years. During the 50s, the share of canals was 37.5 per cent, and in
90s eventhough the area has increased by 0.36 lakh hectares in all, at
0.10 per cent a year. The share of tanks in NIA has been declining from
36.8 per cent in the 50s to 24.6 per cent in the 80s and 22.6 per cent in
the 90s. The over all reduction is 1.97 lakh hectares, at 0.67 per cent a
year.

For wells, there have been substantial growth by 6.45 lakh hectares
over the period with an annual growth of 1.95 per cent. Its share has
gone up from 23.5 per cent in the 50s to 41.6 per cent in the 80s and
44.6 per cent in the 90s. The growth reflects the trend in private
investment in irrigation. Taking the status of irrigation which can be
assessed by analysing the NIA, one might note that NIA has increased
from 21.1 lakh hectares in 50s to 25.6 lakh hectares in 90s, by an amount
of 4.5 lakhs hectares or at an annual growth of 0.45 per cent. The share
NIA to NSA is also rising from 37.4 per cent in 50s to 44.8 per cent in
90s or by 7.4 per cent points.

An examination of the relative importance of various sources of

irrigation and the status of irrigation reveals the following: canal irrigation
has covered an additional area of 1.2 lakh hectares upto 70s and lost an

32
area of 0.64 lakh hectares since then with a net gain of 0.36 lakh
hectares. The possibility of increasing the area under canal irrigation is
extremely limited and one should think of increasing the area by efficiency
factor of productivity per unit of water, by maintenance and up keep of
canal system and minimise water losses.

The case of tank irrigation is rather disappointing as it is a device for

water harvesting of seasonal rains, and to supplement wells and canal
irrigation. The decline in the area, in the maintenance of tanks by 1.97 per
cent a year, reflects neglect, rather than rains as a source which has CV
of 26 per cent over the period of 35 years, during the period of 35 years
ending 1992/93, the NEM which feeds the tanks, 18 years have normal
years, six years with excess rains and 11 years of deficit rains. Apart from
the seasonal eHect one could note that the malady of tank irrigation system
lies in the lack of organisation, maintenance and up keep of tanks properly
and efficiently.

The third source, the wells, has significantly contributed to current

better status of irrigation in the State. An additional 6.45 lakh hectares
have been brought under irrigation by wells and the garden lands as it
were, irrigated by wells and intensively cultivated, are productive. The
severe limitation is its potential. Pudukkottai, Chengalpattu, Muthuramalingam,
Kanyakumari and Thanjavur are the districts where ground water could be
drawn for 3.5 lakhs wells and the rest of the districts in the State has
limited opportunity. The catch world for irrigation in Tamil Nadu is 'organise-
maintain-manage' which should be internalised into the system. Droughts
due to deficits in seasonal rains and curtailed water supplies in canals are
cases in point. The rainfall deficits of SWM in the late 80s have raised
many issues pertaining to technology and management. A more detailed
analysis of the three systems of irrigation will be taken up before that.

Very interesting facts could be seen from Table 17. Against the

endowed potential of 56.5 lakh hectares, around 56 per cent is from
ground water sources, and the rest from surface flows. Seventy-three per
cent of the potential for major and minor irrigation has been harnessed in
the pre-Plan period itself; and nearly 98 per cent of the potential has been
harnessed upto 1992193. The balance left is 28,000 hectares only. Similarly,
69 per cent of the potential for tank irrigation has been used during the
pre-Plan period and, in all, 97 per cent of the potential has been utilised
leaving a _balance of 32,000 hectares. With this significant development in
surface irrigation, it is somewhat perplexing to note that only 56 per cent of
the potential has been put in actual use covering 13.6 lakh hectares of
NIA. There have been discussions at various levels, including the State
Planning Commission, about the gap between the potential and actual use

33
of irrigation. No consensus seems available. Apart from discrepancies in
accounting, there could be confusion about the irrigation development for
stabilising the area under irrigation and about the incremental area reckoned
for utilisation. The programmes under Grow More Food campaign and
irrigation development during the Second World War and the period that
followed upto 1950s have contributed more than 70 per cent of the
potential. This may perhaps need reconciliation and accounting. There can
also be faulty and inequitable distribution of water resulting in unutilisation
of area designed to benefit. But no one is sure. The gap is relatively small
viz. 28 per cent, for ground water which could get reduced if failture of
wells for reasons like dwindling ground water levels, and physical losses
could be accounted for the purpose of the strategies of irrigation
development in Tamil Nadu.

Table 17 : Potential and Utilisation of Irrigation in Tamil Nadu

(Lakhs hectares)

Surface

S.No. Item Major and Tanks Ground- Total

Medium water

(1 ) (2) (3) (4) (5) (6)

-- ,...........-._.
State's Endowed Potential 10.00
1.
-_ 1--
15.00 31.47 56.47

2. Potential Harnessed
----
a. Pre-Plan period 11.00 6.90 0.40 18.30
(733) (79.0) (1.3) (32.4)

b. Post-plan period (upto 1991/93) 3.72 2.78 15.24 21.74

(24.8) (27.8) (48.4) (38.5)
.. _ - -- ._,--

Total 14.72 9.68 1564 4004

(98.1) (96.8) (49.7) (70.90)
._- --
3. Potenlial yet 10 be lapped 0.28 0.32 1583 16.43
(19) (3.2) (50.3)

Nole : The figures in parentheses are percentages to total resources

Source : TNEA, 1993/94, GOTN, 1994

The ultimate potential for irrigation to be tapped is 16.4 lakh hectares

and around 96 per cent of it has to come through ground water
development. This is one part of the strategy but the other part, more
important, is the managing the existing irrigation resources in best conditions
against uncertainties of rains and their distribution.

a) Canal

Canal irrigation covers approximately one-third of the total NIA in the

State. Among the districts, Thanjavur accounts nearly a half of the total

34
area irrigated by canals and together with Periyar, Tiruchirappalli, Madurai,
South Arcot and Coimbatore, they command more than 90 per cent of the
total. There are 71 major and minor irrigation schemes of which 23 are old
schemes and more than two-thirds of registered ayacut is irrigated by these
schemes. Among them the Cauvery Delta System is the largest with 3.23
lakh hectares of the ayacut follwed by Periyar System, Cauvery Mettur
project, Lower Coleroon Anicut, Palar Anicut and Sethi at hope Anicut and
these irrigate more than 80 per cent of the registered ayacut. The new
irrigation projects command 20 per cent of the ayacut and among them,
Parambikulam Aliyar Project, Lower Bhavani, Tambaraparani, Kodayar,
Neyyar and Mettur Canal System are the major projects covering 60 per
cent of the new registered ayacut.

I The Command Area Development Programme, a centrally sponsored

project, is implemented in the Cauvery, Lower Bhavani, Sathanur,
Parambikulam Aliyar and Periyar Vaigai commands. On-farm development
works and rotational water supply, user participation in groups decision and
action on water management are the major components. The programme
provides managerial subsidy to farmers' associations. By the end of 1992/93,
there were 1954 farmers' associations with a total membership of 1,04,198
covering an area of 99,245 hectares. Another project, National Water
Management project, funded by World Bank, was taken up in 1986/87 to
tone up the efficiency of the old systems by adopting modern rehabilitation
techniques. The project covers Sathanur, Kodayar, Tambaraparani, Cumbum
Valley, Amaravathy, Sethiathope and Marudhanadhi systems over an area of
1.53 lakh hectares at the cost of Rs.52.70 crores. With limited scope for
increasing NIA under the canal system and in the context of traunting
monsoon rains which determine the canal stordge and supplies, particularly
in drought years as in 1989/90, there have been attempts by scientists,
irrigation engineers and bureaucrats to design contingent strategies to meet
and manage the exigencies of drought in the State.

b) Tanks

Tanks are the age old devices of water harvesting and storing and
serve as supplementary source of irrigation in the State (Table 18).

That the area under tanks has been declining is a disturbing concern
particularly in the context of new approaches and methods such as
percolalion ponds, check dams and others, which are being introduced.
What seems more urgent, relevant and important is the modernisation of
tanks and institutionalisation of modern concept of organisation and
management. Any investment in tanks for such things as strengthening of
bunds, desilting and others does not fructify unless they are planned, not

35
as a drought relief measure, but as an investment in irrigation infrastructure
to improve the efficiency of tank system. There are 7,300 PWD tanks each
with ayacut of 40 hectares or more, and 31,000 tanks managed by
Panchayat Unions each with ayacut less than 40 hectares. The gross
irrigated area (GIA) is around seven lakh hectares. The central, south
eastern and north eastern districts have large number of tanks.

Table 18 : Number of Tanks in Tamil Nadu

Districts/Regions No. of Tanks PWD Administered by Gross irrigated area
(with ayacut of 40 Panchayat Institution (with (ha)
hectares or more) ayacut of less than 40 hal

Sub Region : 1
Salem 158 664 4436
Dharmapuri 123 2209 22347
A. Zone: X
COimbatore 41 37 2572
periyar 21 31 435
Dindigul Anna 103 2777 11111
Madurai 340 2083 23100
Tiruchirappalli 196 2366 14169
Pudukottai 660 4269 55790
Sub Region : 2 1361 11563 107177
B. Zone: XI
f--
Chengai MGR 1362 2266 157044
N. A. Ambedkar 420 935 24822
T. Sambuvarayar 616 188 47904
-
South Arcol 1176 1501 71329
Sub Region : 3 3574 5890 301099
Thanjavur
Sub Region : 4 130 298 1808
Ramanathapuram 453 1377 57844
Muthuramalingam 709 3874 65226
~

Kamarajar 269 705 15152

Tirunelveli 373 1797 65927
V.O. Chidambaranar 107 521 29528
Sub Region : 5 1911 8274 233677
C. Zone: XII
Kanyakumari
Sub Region : 6 41 2552 28470
The Nilgiris
Sub Region : 7 1 3
State 7299 31453 699014

Source : Season and Crop Report of Tamil Nadu 1991-92, Director of Statistics, GOTN. 1993.

36
The tank modernisation project funded by the European Economic
Community, has been in operation since 1989. The goal is to improve crop
yields per unit of water and to motivate and plan for the adoption of
better management techniques. It has been proposed to modernise 150
rainfed tanks with a total command area of 20,300 hectares and 80 ex-
zamin tanks with an ayacut of 2080 hectares and the proposal has been
revised to include, in all, 319 rainfed tanks and 120 ex-zamin tanks for
44,650 hectares. The achievement upto March 1993, has been 83 rainfed
and three ex-zamin tanks which have covered an additional area of 1676
hectares, and have stabilised irrigation (supplies) in 11,269 hectares. It is
an opportunity indeed to experiment with new ideas and techniques and
with the objective of strengthening the tank system but one would wonder
how long would it take to modernise the entire tank irrigation system. The
components of modernisation include.
I

Oesilting of tanks and using the silt for building soil fertility and structure

Resectioning tank bunds and engineering structures

Improving canals and field channels and embankment

Eviction of unauthorised occupants

Selective afforestation of tank foreshores

Training of client farmers in improved methods of water management and

for motivating them fur joint decisions on planning and plan
implementation

Each one of the tanks has its basic document called as Tank
Gazetteer which should be updated and written anew if lost. Some
institutional arrangements are necessary to manage the tank resources and
a Tank Irrigation Authority at State level to plan for the development of the
tank system in the State. According to one estimate, to modernise 39,000
tanks of different status of repair it would cost about Rs. 650 crores. This
huge investment may be planned over a decade covering perhaps the
period of Ninth and Tenth five year plans.

c) Well Water

Aboul 50 per cent of the ground water potential in terms of its

command has been harnessed so far and more than 90 per cent of this
development has taken place since the 50s.

37
 Table 19 Ground Water Potential in Tamil Nadu

(Upto Septemper 1987)

S.No. Zone/District/Region % Utilisation No. of Share of

of estimated additional weils Sub-Regions
potential feasible

A. Zone X
~-~-----------~-----------+---------------~---------------
Salem 68.77 38569
~---+~------------~------
Dharmapuri ~.31 ~V2

~_-+__ ----,:'...._____
Sub Region: + ___5_9._2_fj_ _~_ _ _ _ .9_0_84~____._I--____(:_7._6-'5)____----1
Coimbatore 76.58 16962
------+-----------~----~
Erode 67.41 32868
Dindigul 49.80 85327
Madurai
--------
Tiruchirappalli 44.64 110365
----.....j-_._- ._._------- --------- . -------------
- 1 - - - - - - - - - + - - _2_8_._52_____-+-____5_24_2_8 ___ ~ ---_ _ _ _ _ _--1
1 - - - -Pudukottai
Sub Region: 2 51.81 297980 (25.10)

Chengalpattu 33.24 82675

r---+--~~----_+--------- --+-----------~------------
North Areot 63.35 80873
------i--- -----------1--------------1-----------1
South Arcot 45.65 244654
f - - - - ---. ---- - - . - - - - - - - f--- - --- - - - - - - --.-- .----- '-.--.------------1
Sub Region 3 52.53 408202 (34.39)
1-----+---- - - - - -.. - - - - - - - .- ----. c---- - .. ---------
Thanjavur
1----+---- .--.--.--------t---.--------~---------------+__----.---__l
Sub Region . 4 3324 103051 (8.68)
1-----4-- - - - - - - - - - - - - - , - - - - - ------ --- ----
Ramanathapuram
1-----1--- ----ic-----.--------.----
1694 184603
._----------1----------------+----- - ---- ---- - ------------.-.-

----1----_._-------1---_._--_.- - - 1--------------
26.90 259048 (21.82)
-----_._._-+-----------_._--- -----_--------- ---_.---'---
--------------
4.36 23774
4.36 23774 (2.00)
0.59 4205
1-----+---- --=-----------1-..-.-------- ------f--------- --- -- .. ---\-------------
0.59 4205 (036)
---------+-----_._----_._. ---- '_'- -'-'- --------
46.76 1187101

Source Ground Water Brochure, Ground Water Investigation Ifl Tamil Nadu, Public Works Departrnent
(Ground Water) Madras P 13

As could be seen from Table 19, the rate of utilisation of ground

water potential has been very high in the districts of COimbatore, Periyar,
Salem, North Arcot; moderate in Dharmapuri, Dindigul, Tiruchirappalli, South
Areot and Tirunelveli districts; and low in Pudukkottai, Sivagangai, Thanjavur

38
and Kanyakumari districts. Moreover, more than 60 per cent of NJA is
covered by wells in the districts of South Arcot, Vellore, Thiruvannamalai,
Salem, Dharmapuri and Dindigul. The number of wells feasible has been
estimated as 12 lakhs of which one-fourth will be in the central districts,
around one-third in the Coramandal region and one-fifth in the southeastern
region. The blocks dark zone are located in the districts of high utilisation
of ground water and one should concentrate development of wells in the
gray and white areas. The major issue in ground water utilisation is that it
is achieved by private sector investment, despite the financing in part by
parastatals. There are other matters of concern such as the access to
investible funds by small and marginal farmers, spatial dispersal of crop
fields, and equity in the use of ground water in the context of excessive
exploitation of a common property resource as it may.

iv. Problems and Issues

The problems and issues of irrigation development in Tamil Nadu

could be summarised as under :

Irrigation potential of the State is extremely low at 0.08 hectares per capita
as against 0.17 hectares for the country as a whole. Per capita availability
of water is 0.026 mcft as against 0.09 mcft for the country as a whole.
Monsoon rains which service the needs of irrigation sources and irrigation,
are fluctuating and therefore less dependable. One should distinguish this
feature from the perennial sources of irrigation in the Trans, and Upper
Gangetic plains of Punjab, Haryana and Western Uttar Pradesh. Age old
irrigation structures, maintenance inadequacies, encroachment of foreshore
areas of tanks, siltation, land/field fragmentation, lack of motivation and
institutional support for group involvement and participation would need
careful analysis for designing new strategies. The surface flow has already
been exploited and has settled around 25 'Iakh hectares. The other part
suffers degradation, and low dependability and because of these the cost
of development will be relatively high.

Given these problems, the State policy needs to focus on a)

promotion of micro irrigation methods of drip and sprinkler irrigation, b)
developing appropriate rain harvesting techniques, c) conjunctive use of
surface and ground water, d) dovetailing land and water use polices, e)
involving farmers in water management including supply and distribution of
water with minimum wastage and maximum efficiency, f) providing legal
framewolk for rational use of ground water, g) popularisation of percolation
ponds and h) early completion of projects on hand and in progress such
that cost over run due to delays could be avoided.

39
 CHAPTER - III
CROP ACTIVITIES: PATTERN AND DISTRIBUTION

Cropping pattern or system of a state or region reflects the influences

of agro-climatic factors such as soil, rainfall, irrigation, sunshine and
topography, status of socio-economic development, and robust experience of
farmers built and passed on over generations. Agriculture in Tamil Nadu,
under the settled conditions, has come to be practiced since first millennium
century B.C. Recent development, in the second half of present century,
particularly, since the sixties, new technologies for varietal improvement, soil
fertility, and pest and disease control have introduced significant changes in
crop yield, cropping system, and seasonality of crops so that the crops can
be grown in all seasons and round the year.

3.1 Crop Patterns

The major crops in the State are rice, cholam Uowar), cumbu (bajra),
rFgi, under cereals and millets, blackgram (urd), redgram (arhar) and
greengram (mung) among pulses; groundnut, gingelly and castor among oil
seeds; sugarcane and cotton are the industrial crops; mango, banana, citrus
and grapes are major fruits; brinjal, bhendi (okra), beans and greens are
vegetables; jasmine, roses, chrysanthimum and tuberosa are flowers; tea,
coffee, cardamom and rubber are of plantations; and chillies, turmeric,
coriander and spices belong to spices and condiments. The present study
covers major cereals, pulses, oil seeds and industrial crops in detail with
time series analysis. Their distribution over the period 1950/51 to 1992193 is
given in Table 20.

The average area under rice has been 23.5 lakh hectares with the
estimated variation (CV) of 13.6 per cent and an annual growth of 0.4 per
cent; the average production has been 43.1 lakh tonnes with larger CV of
29 per cent and a growth of 2.9 per cent; and with the average yield, CV
and growth being 1.9 tonnes per hectare, 31.6 per cent and 2.5 per cent,
respectively. Millets have negative growth in area, marginal changes in
growth of output and significant growth in yields due to hybrids and better
methods of their cultivation. Foodgrains as a whole recorded deceleration in
area and relatively high growth in yields and output.

Area under pulses have also and positive growth in yield, area and
output. Among oilseeds, marginal increases in area and yield are noted.
There -have been marked growth in sugarcane area (4.2 per cent),
marginally in yield (1.4 per cent) and high in output (5.7 per cent) whereas
for cotton there have been small decline in area and marginal growth in
yield and output. Productivity is generally low in all crops when compared

41
with the potential and much has to be done to remove the constraints and
to facilitate adoption of modern technology university across regions and
class of farms.

Localisation of major crops, in terms of their distribution of area,

among the districts in the State is determined by the agro-climatic
parameters such as rainfall, soil and topography along with market
conditions. It measures the importance of a crop of a district with reference
to a set of crops grown in the district and in the State as a whole. The
measure is specified as,

Table 20 : Matrix of Long Term in Crops in Tamil Nadu

(1950/51 to 1992/93)
Area ("000 gal ProdUction ("000 t) Yield (kg/ha)
Mean CV g Mean CV 9 Mean CV 9
1 - - -t---. -- --~-- --~ t---
Rice 2346 13.6 0.39 4372 29.0 2.89 1878 31.6 245
Cho)am 706 714 ()086 558 19.0 0.88 799 20.1 1.60
Cumbu 421 254 (-)1.89 294 18.7 0.53 749 32.4 2.45
-I- -1---.----- ------~ ~~
--
Ragi 278 25.9 (-)1.79 325 15.7 0.25 1239 28.0 2.07
------- r - -
Small millets & 432 31.3 ()2.87 326 29.2 (-)165 771 17.5 1.34
1----
Other cereals
---- -_._- r - - - --.-- - ------~ -~~---
.. _- -_..-
Other cereals 4181 12.8 (-)052 5873 22.2 2.16 1438 31.7 2.70
-- - - - -t - - -
Redgram 72 283 148 39 45.8 2.95 516 24.6 1.38
Other pulses 453 22.4 146 130 48.7 3.99 275 27.8 249
--t-~- -_._-- ----_--_----- --- ---_--- -.--~

Groundnut 912 13.8 0.82 1000 24.8 1.28 1094 14.5 0.80
-- -- ----_-_.. - - -
Gingelly 128 181 007 40 234 1 16 32.1 14.1 1.09
-- ------_ -- . --_ - - - ----
Sugarcane 129 48.9 4.23 1255 60.5 5.66 9049 1767 1.36
Cotton 306 23.6 {-)052 364 24.8 1.28 211 29.9 1.83

NB : Mean-Average for the period . CV . Coefficient of Variations: g . Growth rate per annum over the
triennia ending: TE 1952153 and TE 1992193.

I. Localisation of Crops

The location quotients for the seven major crops for the four crop
years viz., 1960-61, 1970-71, 1980-81 and 1992-93, are estimated and the
details are presented in Table 21. There were reorganisation of district
boundaries at different time for administrative convenience. In order to make
analysis comparable, the data were compiled for the old composite districts.
The. results could be summarised as follows .

For all the four periods under reference, rice crop was grown significantly
in Chengatpet, South Areot, North Areot, Thanjavur, Tiruehirapalli,

42
 Ramanathapuram, Thirunelveli and Kanyakumari districts. In the last year
(1993-94) for which the latest data are available for the reorganised
districts, rice area is significant in Pudukkottai but not in Tiruchirapalli
district. Sivagangai and Ramanathapuram have significant rice area but
not Virudunagar district and similarly, rice is localised at Tirunelveli but not
in Thoothukkudi district. Madurai has joined later to specialise in rice
cultivation.

Cholam (Jowar) had been dominant crop during all the four periods in
Salem, Dharmapuri, Coimbatore, Tiruchirapalli and Madurai districts. It was
grown as a dual crop for grain and todder. Mostly in red loamy soils as
a dual crop for grain and fodder. as an irrigated and rainfed. Black soils
in the south have rainfed cholam as a major crop.

Cumbu (Bajra) crop was localised in South Arcot, Thiruchirapalli and

Tirunelveli districts for all the four periods; Coimbatore and Ramanatha-
puram districts in the last period and Salem dropped the crop from the
stlfenties while Ramanathapuram and Verudunagar districts have
significant area in the last period.

Ragi crop was grown extensively in North Arcot, Salem, Dharmapuri,

Coimbatore and Erode districts during the entire period. Ramanathapuram
dropped in during the last year (1992-93). The unirrigated cropping was
followed in Dharmapuri district and, in the rest, it was irrigated.

Groundnut crop was specialised during all the first three periods in South
Arcot, Vellore, Salem, Dharmapuri, Coimbatore, Tiruchirapalli and
Ramanathapuram districts. In the nineties Pudukkottai and Erode districts
have been added, dropping Coimbatore and Tiruchirapalli districts. Loss of
substantial area of summer groundnut in th~ Potlachi belt and irrigated
groundnut in Manapparai area of Tiruchirapalli district had caused this
shift.

Sugarcane was introduced in an extensive area only recently and

localisation would vary between the periods. For the first three periods
sugarcane was localised in South Arcot., Salem, Dharmapuri, Coimbatore
and Tiruchirapalli Districts. The momentum of the sixties could not be
sustained through the seventies and eighties. In the nineties Coimbatore
and Salem could not retain substantial area under sugarcane whereas
Madurai had entered in sugarcane cultivation in an extensive scale.
Normalli, it substitutes two rice crops and a catch crop since it is an
irrigated crop with a possibility of one or two ratoon crops in subsequent
years.

43
 Table 21 Location Quotients of Major Crops in Tamil Nadu
(1961162 - 1992193)

Crops
No. District. Rice Cholam Cumbu Ragl Ground- Sugar- CoHon
nut cane
1. Chengelpattu a) 2.28 0.50 0.24 1.52 0.90 0.37 -
b) 2.16 0.03 0.22 1.39 1.14 0.33 -
c) 2.35 0.02 0.18 0.19 0.97 0.30 -
d) 1.89 0.01 0.11 0.72 1.30 1.92 0.01
2. South ArCOI a) 1.49 0.76 1.26 0.86 2.13 1.90 0.15
i b) 1.49 0.59 1.47 0.82 1.81 1.93 0.16
c) 1.30 0.41 3.35 0.71 1.82 2.00 0.16
d) 1.00 0.19 3.47 0.42 1.35 2.23 0.58
3. North ArCOI a) 1.34 0.82 0.49 1.17 2.73 2.70 -
b) 1.28 0.63 0.47 1.18 2.57 2.73 -
c) 1.02 1.05 0.59 0.84 3.18 2.37
d) 0.60 1.02 0.57 179 1.95 2.25 0.72
4. Salem a) 0.43 2.15 2.30 4.78 1.58 1.40 0.72
b) 0.51 2.36 2.45 2.18 2.08 1.53 1.00
c) 0.47 1.59 0.86 2.16 2.04 1.33 1.23
d) 0.31 1.35 0.56 1.78 1.51 0.80 0.97
5. Dharmapuri a) 0.54 2.14 0.83 8.34 1.36 1.40 0.57
b) 0.52 1.85 0.73 10.29 1.61 1.47 0.90
c) 0.29 1.19 0.36 6.30 1.03 1.06 0.84
6. Coimbatore a) 0.50 2.92 1.34 1.26 1.45 2.70 3.04
b) 0.46 3.14 1.44 1.45 1.51 2.80 3.23
c) 0.65 2.57 1.20 1.74 1.80 3.90 1.52
d) 0.22 3.32 0.10 0.80 0.92 0.73 1.68
7. Thanjavur a) 2.73 - - 0.15 0.26 1.40 -
b) 2.63 - 0.02 0.08 0.45 0.87 -
c) 2.56 .02 0.02 - 0.44 0.43 -
d) 2.15 - 0.003 0.01 0.39 0.78 0.13
8. Tiruchirapalli a) 1.06 2.13 2.55 0.72 1.35 1.90 1.13
b) 1.07 2.34 2.66 0.61 1.27 1.40 0.41
c) 1.21 2.20 2.43 1.03 1.16 0.97 0.19
d) 0.74 2.77 2.46 0.05 0.97 0.83 1.06
9. Madurai a) 0.91 2.6 0.64 0.70 1.76 1.20 1.93
b) 0.86 2.9 0.36 139 1.56 0.80 041
c) 0.99 2.72 0.88 0.32 2.06 0.97 0.19
d) 1.11 1.10 0.82 0.15 0.56 1.26 1.15
10. Ramanalnapuram a) 1.44 0.36 1.97 1.54 0.56 0.50 3.41
b) 1.60 0.29 1.75 1.61 0.65 0.47 3.25
c) 1.87 034 1.20 1.48 0.53 0.50 326
d) 2.19 0.21 0.26 0.82 0.30 0.01 0.53
11. Thirunelveli a) 1.23 0.73 2.75 0.52 0.26 - 4.67
b) 1.18 0.83 3.58 0.66 0.29 - 5.20
c) 1.25 0.96 3.37 0.71 0.27 - 7.29
d) 1.52 0.28 0.25 0.24 029 0.53 -
12. Kanyakumari a) 2.78 - - - 0.25 - -
b) 2.74 - - - 0.25 - -
c) 2.70 - - - 0.16 - -
d) 1.15 - - - - - 0.02
Note a) 1961/62, b) . 1971(72, c) . 1981/82, d) - 1992193

44
 Ramanathapuram, Coimbatore and Tirunelveli districts specialised in cotton
in the first three periods while Madurai and Tiruchirapalli districts had
come in the eighties and nineties, particularly of Theni and Manapparai
regions. Mostly it is unirrigated in Tirunelveli and Ramanathapuram and
irrigated in the rest of the districts.

Ii. Crop Output and Yields

The area, production and yield of major crops over the past five
decades are presented in Tables 22 to 24. They are the averages of the
decades and the differences between the averages broadly reflect the
centroid of changes between the two decades. The food crops covered, on
an average, 48 lakh hectares, or 71.2 per cent of total cropped area,
whichl had increased to 50 lakh hectares or 5.3 per cent during the sixties
and seventies but declined to 42 lakh hectare or 16.4 per cent and 39
lakh hectares or 7.1 per cent during the eighties and nineties respectively.
Overall, the area under food crops decreased by 17.2 per cent over the
period of five decades. Among the foods crops, cereals area had a drop
by 26.9 per cent, partly compensated by the increase in pulse crops which
had increased by 77.3 per cent.

Cereals accounted for 91.0 per cent of total food crops area, of which
rice (Paddy) crop shared around 48.4 per cent without much changes over
the period. Rice area was 20.89 lakh hectares in 50s which increased by
23.0 per cent during the green revolution of the sixties with a small change
of 2.8 per cent in the seventies; then there was a decline in rice area by
17.7 per cent and 5.5 per cent during the eighties and nineties,
respectively. In all, there was a decline of rice area by 1.7 per cent for the
entire period.

Millets had shown a steep drop in their area over the past five
decades: cholam by 30.2 per cent, cumbu by 55.5 per cent and ragi by
99.6 per cent and decadal variations were also negative, excepting cholam
in the sixties. It would be necessary to consider also the changes in
production and yield to interpret and conclude meaningfully.

a. Rice production increased by 38.6 per cent and 35.2 per cent in
the sixties and seventies followed by stagnation in the eighties, and again
a jump of 23.7 per cent during the nineties. The rice productivity had
increased by 13.6 per cent during the sixties, 30.9 per cent in the
seventies,- then a drop to 24.2 per cent increase in the eighties followed by
an increase of 29.2 per cent during the nineties. The increase in rice
output over the period had been due to increase in productivity, i.e., the
overall output increase was 132.5 per cent and that of yield was 138.6 per

45
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48
cent and the area declined by 1.7 per cent. In other words, broadly
considered, there were 64 lakh tonnes of rice produced in the nineties in
an equivalent rice area cultivated in the fifties.

b. Millets production was declining by 87.6 per cent against the yield
increase of 46 per cent revealing significant area effect. Cholam output
increased by 18.4 per cent and 6.4 per cent in the sixties and the
seventies but fallen during the eighties and nineties while its yields had
been increasing throughout between 6 and 18 per cent. Similar trenJs were
noted for cumbu and millet group as a whole against positive changes in
yipld. Over all, for the entire period, cholam output(yield) increased by 10.7
(58.9) per cent, cumbu 9.6 (137.6) per cent and ragi 9.2 (101.6) per cent.

c. ,Changes among industrial crops are analysed for sugarcane, cotton

and groundnut. Sugarcane area went up by 90.4 per cent during the Sixties
and gradually declined to 48.5, 30.6 and 19.3 per cent for the rest of the
period - with an overall change of 340 per cent since the fifties.
Production soared by 160 per cent from 3.3 lakh tonnes (in gur) in the
sixties and the increase was falling to 68.9, 34.9 and 31.9 per cent for the
rest of the period, with an overall output change of 68 per cent. Yield had
also shown the similar trend: a spurt of 23.3 per cent in sixties fo!:owed by
2.9 per cent in the eighties and 11.8 per cent in the nineties with an
overall improvement of 65.3 per cent over the period. Cotton area declined
by 33 per cent over the first three decades and with 11.4 per cent
increase in the nineties. Against this, cotton output had risen around 13 per
ce ""'t , fallen during the eighties by 6.3 per cent, with an overall increase of
39.5 '~9r cent for the entire period. Productivity gains were 26 per cent in
the sixlTes followed by 30 per cent during the seventies and 17 per cent
for the eighties and nineties over their respective previous decades, the
overall increase being 93 per cent. Groundnut area increased by 43.8 per
cent, output by 78.6 per cent and yields by 22.6 per cent. During the
sixties area had gone up by 24.3 per cent but output and productivity
changed by 13.8 and (-)8.5 per cent, respectively. Area was seen as the
main contributor for output growth, with productivity changes around 7 per
cent.

d. The broad analysis of major crops indicate that productivity gains

through technology and its complementary inputs could have contributed for
output increases. Millets have their area reduced but output had been
stabilised becaUse of increase in productivity. In order to assess long run
changes. annual growth rates were estimated for the major crops.

The growth in area, production and yields has been estimated using the
following semilog regression model:

49
 In C II = 8.,1 + b 1 Til + b 2 (DTI) + b3 In W, + UII
Where e'l - area/production/yield of crop i in time t

T - time variable (t = 1955-56 = 1, 1956-57 = 2, .... )

o - Dummy variable with 1 for the period 1955-56 to 1970-71,

and 0 if other wise

WI - Weather represented by rainfall (in mm) received in year t.

UI is a stochastic residual with zero mean and unit variance

Dummy variables are introduced to account for the differences in slope

and intercept during the period, as has been observed in behaviour of the
variety over a period,

i) Foodgrain Crops

Foodgrain crops include cereals such as rice and wheat; major millets
like cholam (Jowar), cumbu (Barja), ragi, and maize and minor millets such
as samai, varagu, tenai and panivaragu. Pulse crops cover black gram
(urd), green gram (mung), red gram (arhar) and bengal gram. The area
under food 'grain crops in TE 1991/93 was 35 lakh hectares to produce
83.6 lakh tonnes. The estimated long run trend, for the period from 19501
51 to 1992/93, is that area has decelerated by 0.52 per cent whereas the
productivity has risen by 2.7 per cent a year, resulting in an output growth
of 2.2 per cent. In the short run, during the eighties and early nineties
(upto 1992/93), trends were estimated and growth rates which are trends in
semi-log regression models are analysed for the districts. The grouping of
the districts are given in Table 25.

Table 25, Total Food Grain Crops : Growth Spread of Districts In

Tamil Nadu
Area Growth Yield Production

MOU, NIL < (-) 60 CBE (-)4.1 - (-) 6.0

ERO, CBE, TPI, TIN', (-) 2.1 - (-)4.0 SAL

POK, RMO' SAL, CHP'. o - (-) 2.0 CSE'
OPI,NA', SA' o - 2.0 MOU'
TNJ', KKI' 2.1-4.0 SAL, DPI. SA ERD'. TPY. PDK'. NA',
SA', TNJ, OPI, CHP'. TN'
4.1 - 6.0 TPY, POK, TNJ, KKI KKI'
> 6.0 ERO, MOU. CHP, NA,
RMO. TIN. NIL

NB: (+) is not significant at 5% level. See Table for AbbreViations of Districts.

50
It may be noted that all the districts, excepting Dharmapuri, North Arcot
and South Arcot, have ne.gative growth in area; r.ear stagnant in output in
all districts except Coimbatore with negative growth and Thiruchirapalli while
Thanjavur and Dharamapuri districts had',positive growth; and in productivity,
excepting Coimbatore all other districts have recorded positive growth. This
would imply that foodgrains production could be bettered through technology
application and optimization of output through improvement in management."
Substitution of millet crops is possible subject to price ratios determined by
market.

Given the average per capita foodgrain production of the State, one
WOUld, either on the criteria that the state mean exceeds that of the
country as a whole and/or the foodgrains drawn for Public Distribution
Syst,em (PDS), consider the State, with a per capita consumption being ~ 46
kg a year, as self sufficient in foodgrains production in a normal year
(Poduval, 1987). For identifying the districts as surplus or otherwise in
foodgrain production, the state average is considered as a base.

Given this assumption, for the year 1991/92, the surplus districts are
Chengalpattu, South Arcot, Thiruvannamalai, Dharmapuri, Thiruchirapalli,
Pudukkottai, Thanjavur, and Nagapattinam which account for 57.2 per cent
of gross area irrigated and 65.6 lakh tonnes or 79 per cent to foodgrains
produced in the State. Erode, Sivagangai and Tirunelveli districts which
cover 13.3 per cent of gross irrigated area and ~ 0.1 per cent of food grain
production are nearly self sufficient. It may be noted that Sivagangai district,
which is otherwise dry, has 8~.9 per cent of its gross irrigated area under
tank system that depends mainly on NEM rains and partly on flow Vaigai
river during SW monsoon period.

a) Rice (Paddy)

Rice occupies 52.1 per cent of area under food crops and 79.5 per
cent of food grain output in the State. Raised in 17.3 lakh hectares in
1950/5 ~ the rice area reached the maximum of 26.4 lakh hectares in the
seventies and declined to 21.8 lakh hectares in 1992/93, at 1.5 per cent
per year. The growth in rice area has not been decreasing all the time
and one could also note positive growth in the sixties and seventies.
During the fifties, rice area has shown positive growth of eight years of
which two years have growth less than two per cent; and the remaining
two years have negative growth. In the sixties, six years have shown
growth -and four years experienced deceleration. The experience in the
seventies shows five years each of growth and deceleration whereas in the
eighties only four years have shown growth.

51
 The growth in rice productivity has been rising more than that of rice area,
at 2.9 per cent per year; and again the growth varies between 24 to 31
per cent with technological epochs characterised by the green revolution
and intensive farming systems. Rice output in the State has been steadily
increasing at 1.3 per cent along with productivity changes. Per capita
availability of rice is 120 kg in 1992/93 as against 71 kg in the beginning
of the year (1950/51), an incr~ase by 1.7 times. The annual growth rates
of rice production vary between 45.5 per cent in 1974/75 and (-)35.9 per
cent in 1981/82. There have been 13 years with negative growth and
'among the rest of 29 years, growth in excess of two per cent has been
experienced for 23 years. The annual growth in rice yield varied between
27.1 per cent in 1974fi5 and (-)18.54 per cent in 1981/82. Negative growth
is seen in thirteen years.

Rice is grown in all regions and soils under variegated conditions

mostly as a single and double crop and, to a limited extent, a third crop.
Spatial distribution of rice area between the districts shows the
concentration in the irrigated area: valleys of Palar, Cauvery, Vaigai,
Tambarabarani, Chittar, Bhavani and Amaravathy (44.7 per cent); in the
tank commands of North and South Areot, Pudukkottai, Ramanathapuram
(16.3 per cent); and in the wells irrigated command of the central districts
and Kancheepuram, Thiruvallur and Vellore, specially for conjunctive use of
tank and well water (31.7 per cent). In a small area, along the coastal
pockets, rice is raised under semi-dry conditions. Though about 92 per cent
of rice cropped area is irrigated, the sources of irrigation, either canals or
tanks or indirectly wells, depend solely on SW and NE monsoon rains
which feed these SO'Jrces and, therefore, no perennial source of irrigation is
available in the State. This introduces uncertainly in rice area sown in a
given region, in rice yields harvested and, more importantly, in deciding
sowing season.

The maximum rice yield could be harvested in Madurai, Coimbatore

and Erode districts where, apart from other conditions of production,
irrigation risks could be minimized through the complementary source of
irrigation, that is, wells. Similarly, high yields occur in the Palar and Vellar
and Tambarabarani basins where tanks and wells supplement canal
sources; the sole dependence on tanks and uncertain water supplies from
tanks have reduced rice productivity in Aamanathapuram. Extensive rice
cultivation under canal system in the valleys of Cauvery, Vaigai,
Tambarabarani and Kanyakumari have recorded medium rice productivity.
Their rice output is relatively high because of area effect, rather than yield
effect. This would indicate the potential for improvement in rice yield and
output growth in the years to come about which discussion follows.

52
 The area under paddy averages around 21 lakh hectares during the
fifties and it has risen by six lakh hectares during the sixties and seventies
and thereafter, it has decelerated back to the level of the fifties. The latter
implies that nearly 64 lakh tonnes of rice could be produced in the nineties
from an area which had produced only 28 lakh tonnes in the fifties.
Improvement in rice productivity has not only compensated the loss of
output due to drop in area but increased the output in the nineties by 24
per cent over the eighties, 60 per cent over the seventies, and 109 per
cent over that in the sixties.

Table 26 : Trend and Growth in Rice (1951/52-1992193)

T rend simple Adjusted trend Growth simple Adjusted growth CV

Area I -0.0071L -0.01508 -0.72 -1.52 13.62

Production 0.01694 0.01309 1.71 1.32 28.96

Yield 0.02411 0.02817 2.44 2.85 31.57

Trends in area, production and productivity are estimated by semi-log

linear regressions. Time variable is used in a simple regression and in a
multiple regression with weather variable and dummies. The time variable
represents a conglomerate of factors which are otherwise not quantifiable
but they could explain the behaviour of the dependent variable in a
summary fashion. With the use of time series data it summarizes the trend
of changes over time. In this model, annual rainfall is included as a
surrogate of weather, along with time variable. The model is specified in a
semi-log form as discussed in this section. Earlier, linear and double log
models were also specified and estimated. The semi-log form has been
chosen based on the form of scatter, and also its simplicity and efficiency.
This model simplifies the interpretation of trend as growth in the dependent
variable. A coefficient of regression which is positive and significant at a
chosen level of probability would imply significant growth of the dependent
variable whereas as negative significant regression coefficient would imply
deceleration or negative growth; and when the regression coefficient is not
significant, zero growth or stagnation of the dependent variable is implied.
The trend is given as simple and adjusted for weather. The difference
between the estimates of simple and adjusted trend is wide for the
dependent variable area but relatively much less for production and yield.
The variations in rice area over a period of 43 years, as the estimated CV
indicates, have been relatively small as against that of yield and production.
The adjusted growth in yield is 2.9 per cent. An examination of the data
revealed that there had been two distinct periods viz., the period upto 19701
71, and that followed after. In the regressions, therefore, a slope dummy
was specified in addition to intercept dummy and the estimated coefficients

53
of the dummies are significant for a number of crops.

The estimated It' values indicate that both the intercept and slope
dummies are significant for rice area and yield (though at 10 per cent level
of significance) but not so for rice production. This would imply that the
yield effect could have been neutralized by the negative impact of changes
in rice area over the period resulting in output stagnation.

The so called seed and fertilizer revolution in Tamil Nadu had started
much earlier by the closing years of the fifties with the introduction of the
ADT 27 rice variety and the launching of IADP in early sixties.
Subsequently, in the mid sixties the green revolution set in with the
introduction of rice varieties (IR 8, IR 5 etc.) and their derivatives (CO 40,
ADT 35 and others) released from the rice research stations in the State.
The efforts for big push in rice yield seem to have stabilized in early
1970s. Research in rice development has had a new orientation with two
objectives. One, rice breeding has a focus on maintaining the high yield
plateau around mid-seventies and at the same time reducing cost of
production through (a) stress breeding to tackle the problems of drought
and physiological stress, resistance to the major identified pest and
diseases and (b) non-cash inputs and cultural practices, and integrated rice
farming.

Work on hybrid rice has been under various stages of experimentation

and economic evaluation. Hybrid rice has potential and promise to scale
over the yield plateau and register quantum jump in yield b'3sides opening
up opportunities in agri-business and seed industry for income and
employment.

The distribution of districts on the basis of rice productivity differential

is presented in Table 27 below.

Table 27 : Spatial Rice Productivity' Differential

Productivity Districts

Very High (> 3.40) COimbatore, Erode, Thrichirapalli, Madurai, Dindigul Nellai,
Thoothukkudi

High (3.213.4) South Areot, Salem, Kanyakumari

Medium (3.00 . 3.20) Chengalpettu, Dharmapuri, Thanjavur

Low (2.80 . 2.99) Ve:lore, Thiruvannamalal Virudhunagar, Pudukkottai

_.-
Very Low 2.80) Ramanathapuram, Sivagangai, Nilgiris

54
 Yieldswise distribution of districts reveals the structure of rice
production in the state_ Rice yields exceeding 3.4 tlha are recorded in the
central districts that include lower Bhavani, Aliyar, Vaigai, Upper Cauvery
basins and the Tambarabarani basin which together account for 22 per
cent of rice area of the State; high yields in 16 per cent of the area are
reported in South Arcot, Salem and Kanyakumari districts; medium yields
are seen in 38 per cent of the area covering Chengalpattu, Dharmapuri
and Thanjavur districts; low yields occur in 13 per cent of area in Vellore,
Virudhunagar and Pudukkottai districts; and very low yields are found in 11
per cent of the area including Ramanathapuram, Sivagangai and Nilgiris
districts_ It could be noted that nearly 60 per cent of the area has yield of
three tonnes and below_ Leaving the very low yield districts which are
afflicted with extreme weather fluctuations and uncertain water storage for
rite production, one could note that significant potential exists to improve
rice yield in around 50 per cent of the area_ Simply by increasing rice
yields by 0.2 tonnes, the rice output would increase by 2.2 lakh tonnes
which doubles when yield increases two times which does not seem to be
a tall order even if one considers the existing technology and management
of rice production. Assuming the existing seed technology with additional
emphasis on water and fertilizer management, it would be possible to
increase output by half a tonne per hectare atleast which increase the rice
output by 10 lakh tonnes in 20 lakh hectares. How the fertilizer
management could be improved? Its use pattern may be examined in
details.

The pattern of fertiliser consumption, in terms of nitrogen per ha of

gross sown area, has been estimated for all the districts in the State for
the Year 1991/92 to analyse their use pattern. Based on the mean of the
consumption of N fertiliser of 60.5 kg. per ha, the districts are grouped as
High (>90,), medium (71-80) and low (40-70) and very low 40). The
districts are cross tabulated for yield and nitrogen use as below.

Table 28 : Distribution of Districts by Rice Yields and Fertiliser Use

(1991/92)
Nitrogen use (Kg. per ha.) .Yield (t/ha)

(> 3.40) (3.0 - 3.4) (2.8 - 3.4) 2.8)

High (> 90) TIN KKI POK

Medium (71-90) MOU, CBE CHP, TNJ NA, VAN

Low (40-70) TPI, EAO SA, SAL TVM

Very Low 40) 01, TIK OPI AMO, SIV, NIL

55
 In the high use group Kanyakumari, Tirunelveli and Pudukkottai
districts are' included whereas the medium use group includes Madurai,
Coimbatore, Virudhunagar, Thanjavur, Chengalpet and Vellore. Low use
group covers Thiruchirapalli, Salem, Erode, Thiruvannamalai and Salem, and
the very low use group has Dharmapuri, Dindigul, Ramanathapuram,
Sivagangai, Thoothukkudi and Nilgiris districts.

One could note that high productive districts have different levels of N
use, particularly, Dindigul and Thoothukkudi under Vaigai and Tambarabarani
river systems. High nitrogen use is associated with Kanyakumari and
Pudukkottai districts which suffer very high and medium rains, respectively.
Further, very low N use and very low yields are seen in Ramanathapuram
and Sivagangai districts which experience relatively less rains and are
supported by tanks for irrigation; and, on the other hand, the Nilgiris in this
cell could be characterized by high rainfall, but undulated topography which
restricts rice cultivation in bottom lands where water management is tricky
and difficult. Broadly stated, the scope for improving rice productivity in a
significant quantity would, other things remaining the same, seem to lie in
those districts which have low to medium yields and nitrogen use. The
bottom line is efficient water management.

The major constraints of increases in rice yield and output are :

* Unbalanced use of fertilisers distorted by prices and subsidies; and

widespread zinc deficiency in rice fields.

* Impeded drainage and salinity in the coastal regions and tank

commands.

* Inadequate and uncertain supply of water and wide variations in time of

sowing/seeding and planting.

* Changing complex of pests and disease syndrome, environmental

pollution and lack of integrated management and control.

* Declining rice area due to substitution and urban expansion and loss of
productive rice lands.

* Industrial pollution by effluents and degradation of soil quality.

* Decreased use of organic manure and loss of native fertility of soils,

increased micronutrient deficiency of soils.

Insufficient maintenance and distribution of improved seeds and hybrids.

56
The research priorities should therefore include

O. Innovative breeding systems such as stress breeding, hybrid rice and

another culture and varieties having harvest index more that 0.5,
multiple resistance to major pests and diseases.

* integrated nutrient management thOrough a combination of fertilisers,

organic manures and cultivation practices to realize maximtJm nutrient
use efficiency.

* Identification of yield potential of such regions which will respond well to

packages of input and services.

* I Determination of rice based farming systems that maximize the utilisation

of land and water resources.

* Development of varieties of rainfed ecosystems.

* Integrated pest and disease management for cost effectiveness 'and

environment friendly practices.

b) Millets
Millet crops are cholam cumbu, ragi, maize, and minor millets like
samai,o panivaragu, varagu and tenai and they are mostly grown in rainfed
lands starting from SW monsoon season in light soils, extending to NE
monsoon period in heavy soils. They are eminently fitted to monsoon rains
and even the long duration millet varieties, more specifically, cholam
varieties have a shortened duration now to fit in new cropping patterns.
Cholam is extensively grown in Triuchiraplli,' Coimbatore, Dindugul, Salem,
Dharmapuri, Erode and Vellore districts while cumbu is concentrated in
Salem, Tiruvannamalai, Tiruchirapalli, Thoothukkudi and Virudunagar districts.
Rag! is raised in the Salem, Dharmapuri and Erode districts. The area
under millets has been decreasing from 22.3 lakh hectares in the fifties to
14.5 lakh 'hectares in the eighties with an annual rate of deceleration of
1.1 per cent. Among the millet crops, area under cholam has declined from
7.3 to 6.73 lakh hectares, cumbu area from 5.5 to 3.1 lakh hectares,
whereas ragi area decreased from 3.5 lakh hectares to 1.9 lakh hectares,
area is often mentioned as the shift in pattern of consumption and demand
for coar.se grains particularly in rural households. In addition, there are
technical factors for consideration. Cumbu hybrids which were popular but
the crop has been replaced partly in South Arcot and southern districts
because of disease problems. Harvesting of ragi becomes more tedious and
troublesome and therefore supply of labour for harvest is limiting. Millets are

57
hardy crops relatively less susceptible to pests and diseases but under the
changing cropping intensity and patterns of cultivation, it is no more
possible to escape from new pests and diseases. Further, millets are
considered as inferior cereals as their income elasticity of demand is elastic
and demand shift is significant.

Trends and growth in area, production and productivity of cholam

(Jowar), Cumbu (8ajra) and ragi have been estimated for the period form
1951/52 to 1992/93. They are presented in Table 29.

Table 29 : Trend, Growth and CV in Millets (1951/52 - 1992193)

Crop Trend Growth CV

B C B C

Cholam (Jowar) A . 000861 -0.01323 -0.86 -1.32 11.4

P - 0.00056 -0.00455 -0.06 0.46 19.0

Y - 0.00917 0.01784 0.92 1.78 20.6

-
Cumbu (Bajra) A - 0.02083 -0.03038 -2.10 -3.04 25.4
P - 0.00021 -0.00221 0.02 -0.22 18.7

Y - 0.02104 0.02819 2.22 2.82 28.0

Ragi A - 0.02636 -0.034!6 -2.67 -3.52 260

P - 0.00428 -0.00814 -0.43 -0.82 15.7

Y - 0.02192 0.02610 2.22 2.64 28.0

NB : A-Area, P-Production, Y-Produclivity (yield) B-Simple trend, C-Trend adjusted for weather.

A review of the results of semi log-linear regression indicates declining

trend in the area of all crops over tr,e period ; 1,3 per cent for cholam,
3.0 per cent for cumbu and 3.5 per cent for ragi. Productivity gains in
cholam could sustain very small growth in output but this had not
happened for cumbu and ragi because of relatively lesser growth in
productivity. Furthermore, cholam area has comparatively less CV than
cumbu and ragi and also with lesser rate of deceleration. There are many
reasons; first, all the three crops are in millet regions and the possibility of
substitution by cholam crop for others exists more than the others replacing
it; second, as noted earlier, cholam is dual purpose crop by which it can
be grown for grains for human consumption and also for fodder for
livestock and therefore the change would be gradual and in small steps.
On the otherhand, the two hybrids of cumbu had opened for large area
under the crop because of very high yields they had offered. During the
sixties two mutually compensating factors were in operation ; one, to hike
yield through varietal improvement, and two, through land substitution

58
because of high productivity. Inputs use, particularly of water and fertilizers,
and seed varieties, has stabilized yield and output growth. Ragi is a staple
food in the northern districts of Dharmapuri, Salem and Erode and the crop
is grown in garden lands and rainted drylands as well. Alternate crops like
vegetables, fruits and fodder may offer opportunities for value upgradation
and larger returns for investment.

The districts with large area under cumbu are North Arcot,
TiruchirapaUi, Thoothukkudi, Tiruvannamalai, Salem and Virudunagar districts
and they show deceleration in area and production. Growth in yield has
been high and significant in Dharmapuri, Madurai, Thanjavur, Salem, North
Arcot, Ramanathapuram and Tirunelveli and these districts are also noted
with output stagnation because of positive yield growth against the decline
in area~ Salem district is an exception with high negative growth in area
and high to medium growth in yield and output, respectively.

Among the three districts which have more than 10,000 hectares each,
~~Iem and Dharmapuri have been with stagnant area and Erode has
moderate growth. The high negative growth districts have small area under
the crop and their changes have no significant impact. Consequently, the
trend in growth of output tends to be similar with compensating variations
in the yield growth. Since ragi is located in limited districts, its cultivation
depends upon the crop pattern of the district concerned.

c) Pulses

Pulses are vegetable sources of protein and the traditional pulse crops
in the State are blackgram, greengram, redgram, bengalgram, horsegram
and lab-lab and more than 90 per cent of them are grown under rainfed
conditions. Blackgram and greengram are raised extensively in rice fallows
using residual moisture, besides being sown as rainfed crop in dry lands.
Redgram is cultivated under rainfed conditions as a mixed crops.
Bengalgram is sown in black soils in areas marked with morning dew in
the months of December - February. Horsegram is grown in light soils and
when other crops cannot be grown because of delayed rains, horsegram
fits in. Lab-lab is a vegetable and grains crop. At tender stage, it is
consumed as vegetable and when ripened it is a pulse grain used in diet.
The districts with larger area under pulses are Salem, Chegelpattu, North
Arcot, and Kanyakumari. Except Salem other district have shown
acceleration jn production also. The districts of Kancheepuram, Thiruvallur,
Kanyakumari and Vellore registered positive growth in productivity. Madurai
has registered negative growth in Area, Yield and Production.

For the quinquennium ending caE) 1993/94, the area under total

59
pulses has been 8.3 lakh hectares. producing 3.6 lakh tonnes. with the
yield of 430 kg/ha. The long term trends in total pulses is given in Table
30.

Table 30 Trend, Growth and Variations In Pulses

Trend Growth CV

Area _.. - 0.01627 1.63 23

.. - - .

Production 0.04018 4.10 47

---.
Productivity 002503 2.5Q 27

It may be seen that the variations in area and yield ar.e high and much
higher for the output. This phenomenon is not surprising as pulse crops. as
a rule', are rainfed and fluctuate with 'rainfall. The growth in the yield of
pulses bein~ 2.5 per' cent a year is substantial and that area is not less
significant, high CV not withstanding. It WOUld. therefore be, necessary to
examine the performance of indiyidual crops in this group.

Redgram

Redgram is cit major source of protein in the vegetarian diet and it is

grown mostly as a rainfed crop. For OE 1993/94, the average area has
been 1.2 lakh hectares with the output of 0,67 lakh tonnes, with the yield
of 566 kg/ha. The long term growth is 1.4 per cent for redgram area, 2.9
per cent for production, and 1.5 per cent for pr.oductivity. Short term trend
and growth estimates are used for the grouping of districts.

It may be seen that there have been no growth in productivity in the

districts of Salem, Coimbatore, Dharmapuri, Erode, Pudukkottai.
Thiruchirapalli. However, Vellore has a growth of more than six per cent
o,verall, and South Arcot has shown a growth of 2.6 per cent. In the
traditional areas of Dharmapuri and Vellore districts, the growth in area has
been as high as 16 and 9 per cent, respectively; and for all other districts
it is n'ot significant because of high variance induced by seasonal
fluctuations. Productio.n has also revealed significant growth in Tirunelveli
(negative). \(ellore and Oharmapuri districts as one would expect from the
trends in area and yield.

Blackgram:

Mostly, blackgram is raised in rice fallows and light soils in dry lands.
The average area for OE 1993/94 has been 3.2 lakh hectares with the
output being 1.5 lakh tonnes and the yield has been 461 kg/ha. Among

60
the districts, Nagapattinam has the largest area of 0.95 lakh hectare,
followed by South Arcot with 0.48 lakh hectares, Tirunelveli with 0.35 lakh
hectares, and Thanjavur with 0.30 lakh hectares. The least is in
Kanyakumari, Vellore and Sivagangai. The output also tollows the same
trend and most of the area is located in rice growing areas as the crop is
preferred as cash crop in the rice fallows.

Blackgram shows remarkable progress in productivity in Vellore,

Thanjavl.lr, Ramanathapuram, Tirunelveli, Thiruchirapalli and Erode districts.
New technologies of production, high yielding varieties and cultural practices
have improved the productivity. There have been crop substitution to some
extent by soyabeans in the deltas but not much could result due to price
relatives in fEwour of blackgram.
I
Greengram

Grown in 1.48 lakh hectares, on an average, for QE 1993/94, the

crop has produced 0.5 lakh tonnes with an average yield of 461 kg/ha.
The crop is concentrated in the Cauvery Delta, South Arcot, Salem and
Madurai districts with a coverage of 0.10 lakh hectares or more for each
district and they account for nearly 58 per cent of the total area in the
state. They are raised mostly in rice fallows. It shows a high growth,
exceeding six per cent in area and output in all districts, excepting
Pudukkottai and Salem where yield and output growth are not significant;
and for Thanjavur yield growth is significant. Madurai has insignificant yield
and output growth but with significant deceleration in area.

Horsegram

A rainted pulse raised in 1.2 lakh hectares of which 0.98 lakh

hectares or 77.7 per cent is grown in Salem, Coimbatore, Periyar and
Dharmapuri districts. It contributes around 16 per cent of total pulse output
of the State. The area under pulse has decelerated in Erode, Coimbatore,
Madurai, Ramanathapuram districts. While a positive growth in Chengalpattu
and Kanyakumari and stagnant in Salem, Dharmapuri, and Thiruchirapalli
districts. Yield trends indicate that the growth in yields is significant only in
Ramanathapuram, Tirunelveli and Kanyakumari districts which are traditionally
noted for horsegram. As the crop is raised under dryland conditions and in
marginal lands productivity is low and therefore is cultivated with minimum
investment.

Bengalgram

Other pulses are bengalgram which is season-bound, cowpea and lab-

61
lab which are both vegetable and grain crops, normally raised as mixed
crops in combination with millets, and also raised as pure crop along with
other vegetables. They are grown in 1.9 lakh hectares with an output
around 0.29 lakh tonnes. Bengalgram is grown mostly in black soils during
winter with morning dew and it can not be grown in any other time,
though research has focused on breaking this season bound traits.

The area under bengalgram has been decelerating in Coimbatore and

Tirunelveli districts and no significant changes have occurred in other
districts. Further, there have been no growth in output in any of the
districts, and yieldwise significant deceleration could be noted in the districts
of Salem and Dharmapuri and positive growth in Coimbatore and Tirunelveli
districts.

According to one estimate, the demand for pulses varies over 17.4
lakh tonnes in 1995 and 18.7 lakh tonnes in 2000 against the production
of 2.9 and 3.2 lakh tonnes for the respective years. (Rajagopalan 1988).
To bridge the gap between demand (requirement) and supply (production)
seems a tall order and the strategies can be : first, to draw supplies from
other states like Madhaya Pradesh, and second, to improve the efficiency in
production in the existing area in the State. One noteworthy aspect of
these pulse crops is that they are not substitutes among themselves. The
technologies to support the strategies need to include breeding of
. resistance varieties against biotic and abiotic stresses, and by hybridization
through a choice of suitable donors to exploit hybrid vigour in redgram,
cowpea and otr.ers; second, identification of pulse variety with high BNF for
which search has to be intensified; third, high yielding short duration
varieties to fit in intercropping systems should be evolved, and fourth,
improvement of quality and quantity of protein content of pulses. The above
considerations would lead to formulation of goals which are : (a) grain
pulse varieties with quick and early maturing varieties have to be
developed. Fertilizer responsiveness, high DMP and harvest index and
synchronized maturing are the other desirable attributes, (b) varieties that
respond to biological bacterial inoculation under rainfed and drought
conditions need to be identified and upgraded and (c) development of
varieties for rabi season, under different agro-climatic and cropping system
and under different irrigation system would increase productivity and
aggregv.te output.

d) Oil Seeds

The major oilseed crops grown in the State are groundnut, sesamum
(gingelly), castor, sunflower, and safflower amongst which the first two crops
have larger (95 per cent) area. In the country, the State ranks ninth in

62
area (12.9 lakh hectares), sixth in production (15 lakh tonnes) and first in
productivity (1231 kg). The average area, production and productivity of
oilseed crops for QE 1992/93 is given in Table 31.

Table 31 : Area and Productivity in Oil Seeds

(in lakh hectare)

Crops Area Production Productivity

(kg/ha)

Groundnut 10.92 (83.7) 15.17 (94.6) 1376

Gingelly (sesamum) 1.44 (11.00) 0.54 (3.4) 370

Castor 0.28 (2.1) 0.08 (0.5) 309

Sunflower 029 (2.2) 0.20 (1.2) 644

Soyabea~s 0.12 (0.9) 0.05 (0.3) 337

Total Oilseeds 13.05 (100.0) 1604 (100.0) 1229

NB : Figures in parentheses are shares to total oil seeds

In what follows, the trend of performance of the two major oil seed crops
viz., groundnut and gingelly which together account for 94.7 per cent of
oilseeds crop area and 98 per cent of its production, is discussed.

Groundnut

The crop is grown extensively in the State but seems localized in the
districts of Chengalpattu, South Areot, Vellore, Salem, Dharmapuri, Erode
and Pudukkottai which cover around 70 per cent of groundnut area in the
state during 1990/91; and Coimbatore and Tiruchirapalli are a on the
margin with the location quotients around 0.90. The crop area exceeds one
lakh hectares in South Arcot, Vellore, and Salem districts. Groundnut
productivity has been relatively high (1500 kg/tia) in Chengalpattu, North
Arcot, Tirunelveli, Salem, Erode, Thanjavur and the Nilgiris districts;
moderate (1000-1500 kg/ha) in Dharmapuri, Madurai, Dindigul and
Thoothukkudi districts and poor in Pudukkottai, Ramanathapuram, Sivagangai
and Virudunagar districts.

Groundnut is cultivated mostly (69 per cent) as rainfed dry land crop;
and irrigation for groundnut crop is provided mostly by lift irrigation by wells.
Yields also vary between irrigated and unirrigated conditions of cultivation.
Rainfed crop would have a yield ranging between one-half to two-thirds of
yields of irrigated crops.

TQe estimated long run growth of area, production and productivity of

groundnut is shown in Table 32.

63
 Table 32 Trend and Growth In Groundnut

Trend Growth

B C B C

Area 000262' 0.0096' 0.26' 0.10'

Productivity 000516 0.01584 0.52 1.6

Production 0.00787 0.01654 0.79 1.7

NB : (+) - Not significant at 5% level.

The pattern of growth indicates that growth in groundnut area has

been stagnant or negative in Thanjavur, Pudukkottai, Coimbatore and
Tirunelveli districts, whereas high rate of declaration has been noted in
Madurai and Kanyakumari. High growth is observed in Dharmapuri,
Tiruchirapalli and Nilgiris along with moderate deceleration in Salem.
Moderate growth is seen in Erode, Chengalpattu, and Vellore and South
Arcot districts. Yields have been stagnant in most of districts. However, in
the moderate and high growth districts of Erode, Chengalpattu, and South
Arcot, Vellore Dharmapuri, Tiruchirapalli, Nilgiris, the area has grown
significantly which have contributed to output growth. Further, one would
note that growth rates have been high in some districts but are not
significant which reveals high variance due to uncertain weather and
production conditions. Relatively large variance in trend would have reduced
the statistical significance,

Rainfed groundnut is sown in July (Adi Pattam) in the coastal, central

and northwestern regions of the State and irrigated crop is raised during
December-January (MargazhilThai Pattam) in rice fallows and other areas
depending on the crop systems and rotations. Groundnut crop is rotated
with millets such as cholam and cumbu with sunflower as mixture crop and
intercrop in unirrigated lands.

Glngelly

An edible oilseed sown in July-August and December-January largely

as unirrgated crop, and to a limited extent, as irrigated crop in Aabi
season. It occupies around 11 per cent of oil seeds area and three per
cent at oil seeds production in the State. It is concentrated, with more than
10,000 hectares each, in South Arcot, Erode, Salem and Tiruchirapalli
districts and the average productivity is 489 kg/ha. The long run growth
rates of area, production and productivity are furnished in Table 33.

64
 Table 33 Trend and Growth In Gingelly

Trend Growth

B C B C
Area 0.00048' 0.00909' 0.05 0.91

Production 0.00427' 0.02129 0.43 2.13

productivity 0.00643 0.01333 0.64 1.33

NB : (+) - Not signlflcant at 5% level.

B-Simple trend/growth, C-Adjusted lend/growth.

The gingelly area, as could be seen above, has been generally

stagnating
I
due to uncertain weather conditions but in Kanyakumari and
Coimbatore districts the deceleration rates have been noted to be very high
over six per cent a year, and so is the case in high growth districts of
Chengalpattu and Erode. There have been marked reduction in area in
Dharmapuri and Madurai and the opposite is the case for Salem,
Tiruchirapalli, Pudukkottai, Thanjavur and Tirunelveli districts. Production
follows similar pattern when yield growth is not significant either way. In
yield, the growth has been fluctuating widely making the trend coefficients
not significant in most of the districts. GinQelly crop is highly sensitive to
moisture status of soils at the time of sowing where excess rains or lack of
it would affect germination and crop stand. It is sown in fields which are
ploughed and prepared before the sowing season in dryland, and with
residual moisture in rice fallows. Yield variations have been therefore large
and changing regionally.

ii) Horticultural and Plantation Crops

Horticulture includes cultivation and management of fruits, vegetables, spices

and condiments, flowers, and plantation crops. Their distribution during 1993/
94 is presented in Table 34.

Table 34 : Distribution of Horticulture Crops in Tamil Nadu (1993/94)

Areas ('000' hal Produclion Average Productivity
('000' I) (t/ha)

Fruits 179.6 (25.0) 3620.6 20.2

Vegetables 170.9 (23.8) 4516.0 26.4

Spices and Qondimenls 177.8 (24.7) 2713 1.5

Plantation crops 177.8 (24.7) 591.1 3.3

Flowers 12.3 (1.7) 61.7 5.0

Total 718.4 (100.0) 9061.1 12.6

65
 The recent policy strategies on trade liberalization and globalization of
agriculture have opened new vistas of development in horticulture.
Organized plantations of new exportable crops and decentralized farms with
limited specialization have to avail this opportunity. New investment
opportunities are perceived and capitalized the corporate sector. Tamil Nadu
is in its threshold of imminent revolution. in horticulture. The state
government policy has been tuned to confront and solve the problems of
horticultural development. The focus will be on cluster approach such that
infrastructure is fully utilized for specialized production, processing and
marketing in arid horticulture areas and drought prone areas. New crops
such as amla, ber, custard apple, jumbulana and others are proposed for
arid horticulture and regional research has been organized in its support.
Productivity of the conventional crops such as banana, guava, grapes and
citurs are being improved through better choice of saplings, bio-technology,..
seed varieties, cultivation methods and optimum use of land and water
through micro irrigation and management.

The average productivity for each sector has been calculated and
presented above. Intersectoral comparison is not legitimate and one has to
convert them in value terms for a comparison which has not been done for
want of detailed price data. Technical and agro-climatic factors and
feasibility being similar, allocation of area is normally done with reference to
value relatives. Fruits, spices and condiments and plantation crops occupy
each around 25 per cent of total area of 7.2 lakh hectares under
horticultural crops in the State. Flowers of all kind account around 12
thousand hectares or 1.7 per cent of total area. The major flower crops are
rose, jasmine, crosandra, chrysanthemum, tuberose, and recently, cut flowers
and orchids.

Horticultural crops are grown as cash crop with high value and high
share of marketable surplus. Their dependence on market is very crucial,
especially because of their short market spatially and temporarily, as their
perishability and cost of transfer in bulk within the shortest time determine
the quality and form of horticultural products over a long haul. Refrigeration
and containerization have their own costs. For example, transport of fruits
such as mango or flowers involves spoilage and loss of quality in transit
and which increases with the distance of market. Any delay in transport
spells disaster. even in markets, a carry over the stock over days is limited
and cost incidental to it is large. Thus, the factors of perishability and
bulkiness limit the extent of market and market transaction opportunities.
This, with seasonal dumring, accentuate falling of market prices, reduce
traders margin and reduce farmer's share and farm income .

. An integrated marketing system developed for apples of Himachal

66
Pradesh and Kashmir and grapes and mangoes in Maharashtra reveals a
strong and localized production system linked with distribution network of
storage, transport and selling other fruits. Such models have to be
developed in the State. Prices are highly volatile due to seasonal conditions
of supply unless they are insulated through processing, packaging and
storage. Further, horticultural products are income elastic and their demand
seems unstable with income variations and therefore, the supply and
demand conditions influence investment in horticultural development.

The operational size varies from a few trees in farms to a large

plantation area of corporate venture. The period of waiting or production
lags are significantly large that discourages investors who seek to earn
quick returns with certainty. Replanting and replacement involve additional
inveptment periodically. Thus, the investment circle has three phases;
establishment and maintenance, production management, and replanting and
replacement. Investment in horticulture is, therefore, shy and small and in
droplets. Inter cropping and by products are ways of improving cash flows
at the period of zero harvest, partly mitigating income problems. The
random behaviour of income flow from fruit crops either because of
production risks or of price fluctuation seem to constrain Ic:rge scale
investment. Besides, size and scale economics are limited by population
density, and land reform measures and procedures.

For vegetables and flowers, production conditions are not so limiting

but marketing is. Spices and condiments, excepting cardamom, pepper,
cloves and tamarind have less constraints as their storability could be
improved with a small investment and efforts. Most of vegetables area is
concentrated along trunk routes of highways and railways. The cole
vegetables of the Nilgiris, Hosur, Salem, and Dindigul Anna districts are
assembled and sent to Madras, Bangalore, Tiruchirapalli, Madurai and
Coimbatore metropolitan centers through fast moving trucks by night such
that they are made available by morning. Other vegetables such as potato,
tomato and gourds are also transported by road and most of flowers of
jasmine and crosandra are airlifted form Coimbatore, Madurai and Madras
to the northern cities and also to Singapore and Kuala Lampur in Malaysia.
Sporadic efforts in here and there are being made for building high tech
floriculture, specially roses, cutflowers and orchids, for production in glass
houses and open fields for export to European markets. A brief account of
structure of production and marketing is given below for individual crops.

a) Fruits

In Table 35 below, the area, production of fruits and the dominant

districts producing the product are presented. The growth rates are

67
estimated between the average for the first triennium ending (TE 1983/84)
and the final triennium ending (TE 1993/94).

Table 35 Fruits Production in Tamil Nadu

(Area '000' ha, Production : 'OOO't)
Fruits Area Production Growth Dominant Producing
Districts
A P Y

Banana 83.3 (46.4) 2782.4 4.1 7.9 3.7 TPI. CBE, TIN
-_.
Mango 678 (37.8) 422.0 5.4 0.2 -5.3 OPt. MDU, VEL

Lime 5.9 (3.3) 111.2 3.1 8.5 5.2 DGL, TIN, TPI

Guava 5.9 (3.3) 32.0 7.6 2.0 5.3 MDU, SAL, DGL

Orange 4.0 (2.2) 9.5 5.9 11.1 4.9 DGL, NIL , SAL
r---
Jack fruit 2.7 (1.5) 31.8 2.1 -5.2 -7.1 KKI, g,A, TPI
f-----
Grapes 2.4 (1.3) 39.0 5.1 2.6 -1.4 MDU, DGL, CBE, OPI
1----. ---- - -~--
_._.

Pears 1.9 (1.1) 38.5 3.9 7.2 3.1 DGL, NIL, SAL
---- -.~

Pineapple 0.9 (0.5) 39.6 21 3.4 1.2 SAL, DGL, POK

--
Other fresh fruits 3.6 (2.0)
..
18.7 - - - CHP, DGL, SAL

Other citrus 12 (90.7) 14.0 - - - NIL, SAL, DGL

Total fruits 1796 3620.6 - - -
(100.0)

NB : a) Abbreviation of districts as used earlier.

b) Figures In parentheses are percentages.
c) A-Area, PProductlOn , Y-Yleld

Among the fruits grown in the State, banana occupies 46.4 per cent
of the area under fruits whereas mango shares 37.8 per cent. Banana is
strictly an annual crop but rationed for an additional year for leaves; it
comes in three, five-year crop rotations such as banana-rice-rice or banana-
sugarcane or incombination of annual wet crops. Tiruchirapalli, Thoothukkudi
and Tirunelveli have major share of area under banana with different
varieties and combinations. Poovan and Nendran are grown in large areas
in Tiruchirapalli, whereas Cavendish and Robusta are dominant in the
southern districts. South Arcot, Vellore, Thanjavur and Erode are the other
districts each having area of 5000 hectares and above under banana
cultivation.

The estimated production of banana is 27.8 lakh tonnes which works

out to 33.4 tlha, on the average. The growth, worked out between two
triennial averages, is 4.1 per cent a year and output has also registered a
significant high growth of 7.9 per cent a year. Bana.la competes with rice

G8
and sugarcane for land and water and one would have to examine the
relative price and cost structure carefully while designing cropping patterns.
Furthermore, banana fruits are perishable with limited shelf life and
storability, poor standing against stress while in truck transport. Recent
growth in area is induced by high prices through inter-district and inter-state
movement of banana gravitating towards high price markets in Kerala and
Karnataka.

With the annual production of banana of 6.2 million tonnes, India

ranks first sharing the world banana output by 13.5 per cent. Brazil,
Philippines, Indonesia and China are the competitors in the market. In
India, Tamil Nadu is the second largest producing state with one million
tonnes, followed by Gujarat, Assam and Andhra Pradesh. India exports
around, 520 million tonnes of banana mostly to the Gulf countries. The
exports do not commensurate with the production base India enjoys. Indian
banana is good in flavor and taste and a wide opportunity exists atleast in
a part of the European market which imports three million tonnes annually.
It is estimated that about 60,000 tonnes could be exported in the next five
years to West Asia (30,000 tonnes), Europe (15,000 tonnes) and SE Asia
(15,000 tonnes).

The major problems of exporting banana are a) lack of suitable choice

varieties for export, b) inadequate and inappropriate pre-harvest and post-
harvest pl'actices, resulting in deterioration of quality, and c) lack of
infrastructure for packaging, storage and transportation. Some. of the
strategies for export of banana are

Introduction of tissue culture plantation in ".select areas, marked for export

Designing pre and post-harvest technologies and training of farmers and

export agencies on the technologies

Development of infrastructure for transportation by sea which make export

price competitive

Building market infrastructure for grading, sorting, cleaning and packaging

Organizing export promotion

Mango
Mango accounts for 37.8 per cent of total fruit area in the State and
unlike banana, it is a perennial crop raised under rainfed conditions and/or
partly irrigated. Chengalpattu. Dharmapuri, Madurai, Dindigul and Vellore

69
districts have maximum mango with 78 per cent of area and 72 per cent
of production, and among them Dharmapuri accounts for 33 per cent of
area and 31 per cent of output. In other districts, mango is not raised in
large plantation scale and most of them are raised as a part of farm with
a few trees. The area is growing steadily at 2-3 thousand hectares upto
mid-eighties and around four thousand hectares thereafter.

Over the decade, the area under mango has grown at 5.4 per cent a
year while output increased at 0.2 per cent and productivity has declined
due to production lags and seasonal conditions such as heavy rains and
winds at the time of flowering. In Madras market, fruits from Andhra
Pradesh ana Karnataka states flow in as early arrivals, followed by arrival
of mangoes from Salem and Dharmapuri districts. Mango varieties are
many, showing regional and sectional consumer preferences. The state has
yet to register entry in export trade in a significant way and it is of serious
concern that popular varieties of Malgoa and Banganapalli are not
considered still as potential candidates for export, nor they have ever been
introduced significantly.

India is the largest producer of mangoes in the world accounting for

63 per cent of total world production. U.S.A. is the largest importer of
mangoes covering around 50 per cent of world imports of 15 million
tonnes. The other countries are EEC (24 per cent) and Middle East (22
per cent). Indian exports fluctuate widely between 9,000 and 20,000 tonnes
and, on an average, around 2.3 per cent of world trade in mangoes. It
may be noted that most of exports of mango are targeted on ethnic
Indians in Middle East and U.K and no significant entry is made in EEC
and South East Asian countries. The estimated potential is 40,000 tonnes
and the prospect of increasing the volume of mango exports is mainly
limited by the over dependence on a single variety viz. Alphonsa, whereas
many varieties such as Neelam, Mulgoa, Bangalora and Sappattai which
are not at all introduced in the world market so' far. Varietal diversification
is necessary. Further, infrastructural facilities for processing, packaging and
transport are not available adequately. Investment and technological support
will increase the participation by India in the world mango trade.

Grapes
India produces 40,000 tonnes of grapes which is around 6.8 per cent to
world production and it has exported mainly to UAE (92 per cent) to the value
of Rs.11 crores. Grapes are raised in Madurai, Dindigul, Coimbatore and
Dharmapuri districts under irrigation and which accounts for 92 per cent of the
area. Tamil Nadu has contributed about Right per cent of the country's output
and its export is not significant. India has to compete hard with Italy, a major
exporter in Europe, and other countries of South America. The major limitation

70
for export is transportation which, when air lifted, becomes very costly and
constrained competitively. India enjoys high productivity and its variety
Thompson Seedless is an accepted one in the world market. It should be able
to export 40,000 tonnes a year in the next three years.

Some of the strategies to achieve the target are development of

methods for export by sea so that the cost could be reduced substantially.
Basic surveys need to be conducted to identify markets, trade and
distribution channels and consumer preferences. Investments in a large
scale, particularly, in private sector; would be forthcoming if the state could
support through removing some of the constraints of land ceiling, and
encouraging workable, equitable contracts between small producers and
corporate sector would go a long way in production and trade.
I
Other Fruits

The other fruits are lime and guava which occupy each 3.3 per cent
of total area under fruits. Lime is grown extensively in Dindigul, Tirunelveli
and Tiruchirapalli districts with a ,concentration of 80 per cent. There have
been significant growth in output by 8.5 per cent a year due to both high
growth in area and productivity.

Over half of the area under guava is in Madurai, Salem and Dindigul
districts. Most of the fruits are consumed around the districts of production
plus metropolitan markets. This has shown high significant growth in all its
three components, the maximum (7.6 per cent) being in the area.

About 92 per cent of oranges are grown in Dindigul (Lower Paleness),

the Nilgiris (Kothagiris and Kallars ranges) and Salem (Yercaud hills) and
they come mostly as shade crop for coffee plantations eventhough a few
orchards can be seen in the Kallar-Burilyar ranges of the Nilgiris. The
growth in production has been high (11 per cent) due to both area
expansion and yield.

Around 60 per cent of Jack fruit is grown in Kanyakumari, South

Areot and Tiruchirapalli districts in red soils with good drainage. There have
been declining trend/deceleration in yield and output even though the area
has grown at 2.1 per cent a year.

Among the other fruits, pears are confined to hills and semitropics of
Dindigul, the Nilgiris and Salem districts with high growth over the decade.
Pine apple is grown in Salem, Dindigul and Pudukkottai districts extensively
covering 98 per cent of pineapple area. In all, Dindigul, Salem, Dharmapuri
and Tiruehirapalli form the core fruit belt or fruit basket of Tamil Nadu.
Light red loam soils with good drainage facilities and well distributed rains

71
and congenical weather conditions set a great scope for fruit crops which
also offer potential for efficient production, cost advantages in processing
which together will add t;ompetitive advantage for trade.

b. Vegetables
India is one of ten countries where vegetable production through out
the year is possible .. The total production in the country is around 53
million tOflnes and Tamil Nadu produces around 4.5 million tonnes. Details
are given in Table 36.

Table 36 : Vegetable Production in Tamil Nadu (1993/94)

Area : '000' ha
Production : '000' t

Vegetable Area Production Growth Dominant District

A P y

Onion 24.6 197.8 2.3 0.8 (-)1.5 SAL, TPI, OGL

(14.4)
Tomato 20.4 265.6 6.3 6.7 0.4 SAL, CBE, DPI
(11.9)
Brinlal 8.9 121.7 1.4 1.1 (-)0.29 SAL, DGL, SA
(5.2)
Bhendi 4.0 41.5 5.5 2.7 (-)2.5 SAL, NAA, DGL
(23)
Tapioca 85.4 3221.7 4.7 6.9 2.0 SAL, SA, DPI
(50.0)
Potato 5.8 128.4 (-)5.6 2.3 8.4 NIL, DGL, DPI
(3.4)
Carrot 30 68.0 19.2 17.8 (-)1.2 NIL, DGL, OPI
(1.8) Sweet potato
Beans 1.4 6.4 58 16.4 12.6 DGL, ERO, CBE,
(0.8)
NAA Cabbage 1.2 141.0 (-)3.1 10.2 13.8 NIL, DPI, MDU
(0.7)
Green 1.2 6.4 (-)5.9 (-)4.6 1.4 DPI, MOU, SAL
(0.7)
Yam 1.1 28.4 4.2 3.8 (-)0.4 ERD, NAA, TIK
(0.4)
Beetroot 0.8
(0.5) 18.3 - - - , MDU, NIL, CBE
Pumpkin 0.7
(0.4) 190 - - - TPI, CHP, SA
Other vegetables 9.6
(5.6) 205.4 - - - DGL, CHP
Total Vegetables Tapioca 170.9 4516.0
(100.0)
Total without Tapioca 85.5 1294.3
(5.00)

72
 Tapioca

Tapioca is classified as a vegetable as its tuber is consumed as

staple food in rural areas in parts of the State but its major uses lay
elsewhere in sago industries for processed food and for industrial starch.
The cultivation is concentrated in Salem, South Arcot Villupuram and
Dharmapuri districts and the concentration of tapioca processing industries is
around Salem and part of their needs is also meet from supplies from
Kerala State. The production has grown at 6.9 per cent a year contributed
through an extension of area (4.7 per cent) and improvement in productivity
(2.0 per cent).

Onion, tomato, brinjal, bhendi, sweet potato, beans, greens, yam and
othefs form a group of tropical vegetables in major crop seasons and
mostly they are irrigated. They cover around 38 per cent of vegetable area.
One could also note some degree of concentration of areas in specific
tracts and, generally, their cultivation, processing and sales are in the
hinterlands of urban markets, the access to which is designed and
contracted in many ways ranging from crop contract, tied sales, and some
variations of them.

Onion and Tomato

Onion is grown as garden land crop in Salem, Tiruchirapalli and

Dindigul with water from wells. It is a short crop harvested in 90 days
eminently suitable for crop rotations. Area has grown at 2.3 per cent a
year and yields tend to decline. Tomato is grown in 20 thousand hectares
in all and around two-thirds of its is under irrigated conditions. Though this
crop is fairly dispersed, a concentration with more than 2000 ha could be
seen in four districts of Salem, Coimbatore, Madurai and Dharmapuri.
Rainfed crop of Salem and Dharmapuri districts fill in deficit in markets in
off season, realizing higher prices and income. The growth in tomato
production is mainly due to extension in its area. Prices are highly volatile
the range between short supply and scarce markets and large supply by
factor five to ten as products are dumped immediately after harvest. Limited
market in the absence of processing, packaging and transport facilities
determines prices as farmers are price receivers.

Brinjal and Bhendl

Brinjal and bhendi are grown in about 13 thousand hectares mainly in

Salem, Dindigul, Cuddalore, Villupuram and Vellore districts. A moderate
growth (1.1 per cent) in brinjal output and that of bhendi (2.7 per cent) are
noted.

73
 Potatoes are grown in the Nilgiris, Dindigul (Kodai Hills) and northern
stretch of Dharmapuri district. The area is small with 5800 hectares and
potato is imported from adjoining states. The other cole vegetables such
as carrot, cabbage and beans are also grown in the sub-tropical belt; and
greens are grown every where in small plots with pot water; yam is raised
in Erode, Veil ore an'd Thoothukkudi districts whereas sweet potato is
cultivated in Tiruchirapalli, South Arcot and Madurai districts. Other
vegetables include radish, cluster beans, gourds an cucurbits and other. In
sum, vegetables are much variegated and not much of specialization is
practiced excepting the crops such as onion, tomato, potatoes and cole
vegetables.

Among the green vegetables exported, bhendi (Okra) has a share of

60 per cent, followed by bitter gourd (20 per cent), green chillies, (10 per
cent) and mixed vegetables (10 per cent). During the last 10 years, India
has export~d annually 20 to 30 thousand tonnes of fresh vegetables with
the value of RS.20 crores.

The export is constrained by lack of infrastructure and information

support. New vegetables of high value in export markets need to be
developed/improved. Green and lima beans fresh for domestic and gulf
markets, and processed and frozen for European markets are promising.
Other crops are sweet corn, baby corn, asparagus, celery and bell pepper.
India can export 7000 tonnes of these vegetables annually. Import of
technology, germplasm and cultural practices would help to increase exports
of green vegetables.

Onion is one of the important export products in Tamil Nadu. India

exports 10-12 per cent of its onions produced and the major countries to
which exported are Bangia Desh, UAE, Singapore, Malaysia and Soudhi
Arabia. New countries could be EEC, Mauritius, Srilanka, India's export
target is fixed as 4.5 lakh tonnes per year. Packaging continues to be
traditional which needs change to suit the consumers preferences and to
conform to international standards.

c) Spices and condiments

~

The area and production of the major spices and condiment crops are
summarized in Table 37 below. The dominant districts where significant
quantity is produced is listed along with growth rates.

14
 Table 37 Spices and Condiments In Tamil Nadu (1993194)
Area : '000' ha
Production : '000' I
Crops Area Production Growth Dominant District
A P Y

Chillies 73.4 43.7 0.1 2.3 2.2 . AMD, TTK, TPI

(41.3)

Coriander 51.9 11.0 (-)3.1 (-)7.3 (-)4.4 TPI, TTK, VAN

(29.2)

Turmeric 22.1 136.6 3.2 4.1 0.9 EAD, CSE, SAL

(12.4)

Tamarind 18.6 58.3 4.7 4.6 - MDU, DGL, DPI

, (10.5)

Cardamom 5.4 0.5 (-)0.2 (-)0.6 (-)0.4 MOU, NIL, TIN

(3.0)

Pepper 3.0 0.6 14.3 12.9 (-)1.4 NIL. SAL, OGL

(1.7)
f-
Garlic 1.1 6.2 4.8 5.3 0.5 DGL, NIL, EAD
(0.6)
Ginger 0.6 12.2 (-)4.3 2.8 7.5 NIL, DGL, KKI
(0.3)

Cloves 1.0 0.9 2.9 (-)1.1 (-)4.3 KKI, NIL, TIN

(0.5)

Other spices 0.8

(0.4) 1.6 - - - CSE, TTK, DPI

Total Spices Condiments 177.8 271.3

(100.0)

The major condiments of the State that are ~referred for cUlinary
preparations are chillies, coriander, turmeric and tamarind which cover 90
per cent of the area under spices and condiments. Around 58 per cent of
chillies are concentrated in Ramanathapuram, Thoothukkudi and Tiruchirapalli
districts and the rest is despersed in all other districts as green chillies and
dry chillies in small plots, specially to meet the local needs and nearby
urban markets. About 90 per cent of coriander area is localized in black
soil tracts of Tricuhirapalli, Virudunagar, Thoothukkudi and South Arcot
districts. It is grown as pure and mixed crop as well with bengalgram and
cotton crops in mixer_

Turmeric is raised in 22 thousand hectares in the upper Cauvery and

Lower Bhavani basins and in garden .lands of Erode, Coimbatore and
Salem districts. It is one of the preferred cash crops in rotation with ricel
banana/sugarcane, mixed with indigo which is a dye crop, and as intercrop

75
in coconuts. Tamarind is grown in 18.6 thousand hectares mostly in dry
lands as avenue trees and on poramboke lands and village commons.
Madurai, Dindigul and Dharmapuri districts are the dominant producers. Its
area has increased substantially at 4.7 per cent a year.

Cardamom, pepper and cloves are important tree spices of export

importance. Cardamom is grown in 5405 hectares along the foot hills of the
Western Ghats in the districts of Theni, Madurai, the Nilgiris and Tirunelveli
districts. During this decade there has been declining trend and deceleration
in area, production and yield. Pepper is raised in three thousand hectares,
over the Nilgiris, Salem (Yercaud) and Dindigul (Kodai hills) districts while
Kanyakumari, the Nilgiris and Tirunelveli districts are dominant for cloves.
Their output is however very small. The third group of spices include garlic
and ginger with an area of 1.1 and 0.6 thousand hectares, respectively.
The former is largely raised in Dindigul, the Nilgiris and Erode districts,
while the latter is grown in Kanyakumari, the Nilgiris and Dindigul Anna
Districts.

d) Plantation Crops

Most of the tea area, around 97 per cent in the Southern states, is
concentrated in Tamil Nadu and Kerala and it has been estimated that only
15,000 ha of land is available for further extension of the area under tea.
This means that greater attention is necessary to improve productivity to
increase tea output for meeting the increase in domestic consumption and
the widening Dpportunities for trade. Incidenta"y, in tea exports India has to
compete with other countries such as China, Indonesia, Srilanka and Kenya
with the strength of cost effective production and processing technologies.
Production of tea is constrained by biological and institutional factors and
one should recognize the time lag in production, semi maturity period, a
peak output stage followed by gradual decline in productivity over years
and prices are exogenously determined.

The Government of India implements the following tea development

projects through Tea Board. They are : Tea Plantation Finance
Scheme, Tea Machinery Hire Purchase and EqUipment Scheme,
Replantation SubSidy Scheme, and Tea Area Rejuvenation and
Consolidation Subsidy Schemes.

76
 Table 38 Area Production and Productivity of Tea in ramil Nadu
(1955/1990)
Year Area Production of Productivity No. of Tea
('OOO'ha) Made Tea ('000' t) (kg/ha) Estates

1955 35.23 33.67 956 2772'

(-1.5) (2.3) (3.8) (61) 1960

1970 34.65 55.56 1604 6450

(0.7) (2.9) (2.2) (004)

1980' 37.03 74.01 1998 6704

(0.4) (3.3) (2.9) (0.2)

1990 38.73 102.59 2662 6819

NB : Figures in Parentheses indicate average annual rates of growth between years/decades .

for 1951, and subsequently for 1961, 1971, 1981, 1991
hElre are small divergences from that of statistics provided by Dept. of Horticulture & Plantation crops.

Such a:> 1960181 39.52 I 217.34 I 5000

1990191 60.25 I 421.78 I 7000
1993194 62.02 I 452.74 I 7300

The area under tea in Tamil Nadu has increased from 35.23 thousand
hectares in 1955 to 38.73 thousand hectares in 1990, at the rate of 0.3
per cent a year while the corresponding growth in production and yield are
3.2 per cent, and 3.0 per cent respectively. The growth in the number of
tea estates has been 2.2 per cent a year.

Setween years, the growth in tea area has been marginal and
modest, and that of production and yield have shown high growth indicating
the proposition that output growth in tea should be generated through
technology and efficient estate management. Earlier studies on tea have led
to similar conclusions.

For All ~ India situation, Linear model : (1921-1968 excluding 1943-

1946, 1952 and 1954)

A.,_ = 2
369' + 0.2002 T, + 0.0083 (T ,) + 14.3662 p,., - 8.9562 Pr,
R = 0.83
Y'2 = 137.28' + 63.7777P ,., - 41.3550 Pro + 2.7786 y' ,.,
R = 0.99
For Tamil Nadu Situation, Double log model: (1950 - 1984)

A'2 = ~ 2.726i + 0.0707 P 1.5 + 0.7346 S' ,., - 0.0495 P"6 + 0.0146 Ot
R = 0.80
\ = 5.0929' + 0.1422 p' '2 + 0.2550 S' ,.1 + 0.2260 T' , + 0.1304 D',
R = 0.97 I

* = Significant at 5% level.

77
Where A, and Y, are area and production under tea in year t. Pl." PI.5 -
Price of tea lagged by one/five six years.

Prt The ratio of price of tea in T to the maximum price during the
preceeding years.
TI - Time variable, T = 1,2,3, .....
B,., - Bearing area lagged by one year

The linear models of area indicate that price of tea could explain the
variations in area but there has not been any significant trend in area but
production shows significant trend of 2.8 thousand tonnes a year. For Tamil
Nadu, during (1950/84) the variations in bearing area of tea could be
explained better by the production regressions in which prices and trend
are significant. Dummy variable, specified to reflect the impact of
development schemes, is also significant and captures the shift (intercept) in
production due to technology. There have been efforts to expand the area
under tea to non-traditional area of the slopes in the Western Ghats
primarily to increase production of tea with additional goal of transferring
some of the area under annual crops to tea as a measure of conserving
soils and soil productivity.

Tamil Nadu, Karnataka and Kerala and the states which form the
coffee belt on India and the crop is coming in the non-traditional areas of
Andhra Pradesh and the North eastern hill states. Arabica is dominating in
Tamil Nadu and its share in the total area of the country was 35.6 per
cent in 1950/51 which has increased to 26,560 hectares, or an increase of
per cent, in 1990/91. There have been variations marginally over the
decades. Generally, the area under coffee in any year is the carry over of
the area (stock) of the proceeding year plus cutting an removal. Therefore,
changes in area over a year are small while decadal changes could be
substantive due to accretion of area.

One could note that there was an increase of about 1000 hectares or
a growth of 0.6 per cent a year during the fifties, a drop of 5000 hectares
or deceleration of 2.1 per cent in the sixties, an increase of 7000 hectares
or growth of 2.7 per cent in the seventies and a decrease of 1000
hectares during the eighties. Similar trends, at a lesser magnitude, could be
noted for' Aobusta also. However, changes in production and productivity
have been substantial both for Arabica and Robusta. The productivity has
doubled over the 40 yeras (Vide Table 39).

78
Table 39 Area, Production and Productivity of Coffee in Tamil Nadu
Year Area ('000' hal Produclion ('000' I) Productivity (kg/ha)
A R A R A R

1950/51 24.09 0.96 2.13 0.23 134 245

(35.6) (3.8) (10.8) (6.9) - -
1960/61 25.61 2.86 5.63 1.31 220 458
(36.3) (5.8) (14.2) (4.5) - -
{O.6} {11 5} {5.7} {19.0} {5.1} {6.5}
1970171 20.75 2.71 5.15 2.66 248 594
(25.8) (4.9) (8.8) (5.1 ) - -
{-2.1) {-0.5) {-0.9} {7.3} {1.2} {2.5}
1980/81 27.11 5.65 10.30 4.68 380 828
(24.4) (5.7) (16.8) (8.2) - -
{2.7} {7.6} {7.2} {5.8} {4.4} {3.6}
1990/911 25.56 5.62 7.55 2.76 284 491
(20.8) (3.9) (9.6) (3.0) -
(-2.9)
-
{-5.1}
{-0.2} {-0.05} {-3.1} {-5.1}

NB : Figures in parentheses ( ... ) are percentage share to All India tolal, and in ( ... ) are annual growth
rates A - Arabica, R - Robusta (-) - Not Available.

3.2 Industrial Crops

I) Sugarcane

Sugarcane is one of the major industrial crops which supports 240

sugar factories in the State. The crop requires tropical climate and well
drained soils for excellent results of crop output and sugar recovery. The
State stands first in sugarcane productivity with 114 tonnes per hectare,
contributing 9.7 per cent of the national output from 6.1 per cent of the
sugarcane area. Sugarcane is mainly grown as planted crop with a
possibility of one year ratoon to follow and, in general, the former occupies
around two-thirds of the total area. The crop was raised on an average, in
0.52 lakh hectares in the fifties which had gone up by 90 per cent during
the sixties and 2.3 lakh hectares in the nineties registering an annual
growth a 3.8 per cent. Sugarcane yields are increasing over the years with
Significant increase of 23.3 per cent over the fifties and thereon gradually
building up to 34.93 lakh tonnes registering a growth rate of 5.3 per cent
on the average. The long term trends in area, production and productivity
are given in Table 40.

Relatively, computed for single sugarcane crop against two rice crops
for the period of cultivation, the crop ,needs less labour than rice and also
less irrigation per unit area. The cyclical behaviour of sugar prices and
adjustment in sugarcane area gets moderated by price policy which sets
support price for sugarcane every year. What seems disturbing is about the

79
strategies and management of cane harvesting and crushing which are
bogged down due to institutional rigidities and bureaucratic controls in
private and co-operative sectors as well.

The estimated trend and growth of sugarcane area, production and

productivity is presented in the following Table 40.

Table 40 : Trend and Growth in Sugarcane

Trend Growth CV

B C B C

Area 003796 002319 3.8 2.3 49

Production 0.04998 0.03228 5.0 3.2 60
Productivity 0.01168 0.00921 1.2 0.9 18

C-Values are adjusted for weather and dummies in a multiple

regression schemes and they are taken up for analysis. Productivity growth
has been modest, but area grown by 2.3 percent which together
contributed to output growth of 3.2 per cent. One might also note that CV
of area has been very high (49 per cent) and that of output is much more
(60 per cent) and it is relatively small for productivity (18 per cent) seems
to have stabilized at high level due to high level technology in sugarcane
farming in the State.

A mention about the emerging sugarcane model extensively practiced

would seem to be relevant. The linkages between farmer clientele an sugar
factory of a region facilitate quick transfer of technology and inputs delivery
system. The linkages though weak and loosening are not lost altogether.
Price and cost factors play a significant role in area substitution and output
modification. It is possible that output could be affected due to 'untimely'
cut orders by mills resulting in loss of output because of low sugar
recovery of aged cases.

Among the districts, South Arcot district has the maximum area of
0.55 lakh hectares followed by Tiruchirapalli with an area less than half
that of the former (0.20 lakh hectares) and the crop in grown in all districts
except Kanyakumari where rice and coconut dominate. The distribution of
districts over the productivity range is worked out by calibrating the yield
range with very high (>110), high (100-110), medium (80-99) and low 80).
The distribution is given :n Table 41.

80
 Table 41 Sugarcane Productivity Differential and Share

Yield (Vha) Districts Share of Area

Very high (> 110) CHP, SAL, ERD, DGL 19.8

High (100-110) SA, CBE, TPI. TNJ, NGP, MDU, RMD, 59.1
VNR, SVG. TIN. TTK

Medium (80 - 99) TVL, DPI, PDK 12.8

Low 80) VLR 8.3

The very high productivity districts account for 20 per cent to total
sugarcane area of the State whereas high and medium productivity districts
together cover 72 per cent. Vellore district with third largest area of about
0.20 lakp hectares has the less productivity. Though the modal districts
yield more than other sugarcane producing States, the potential for
improvement by five tonnes per hectares on the average would change the
face of sugarcane economy of the State and India.

Sugarcane uses more fertilizers and in terms of total nutrients (N + P

+ K), the State average consumption is 0.397 tlha. Among different classes
of farms, the range of use between small and large sugarcane farms is
between 0.351 and 0.325 t/ha, respectively. Marginal farms have a very
high level of 0.613 t/ha which perhaps include high level of organic and
farm yard manures in the very intensively cultivated family farms. The crop
is a cash/commercial crop with well defined markets and, therefore,
economic stimuli such as incentive prices and unit cost reducing
technologies have greater bearing on productivity.

With rising trend in yield and decreasing amplitude of annual variations

in production, it would be possible to increase output through increasing the
area under sugarcane and upgrading yields in the medium and low yield
districts. There are also policy issues on its substitution of foodgrain crops,
on the macro aspects of national output and prospects of export of sugar.
Sugar mills are generally viable, it is argued, when they have
complementary units of distilleries under the system of dual prices and cash
crunch.

The State has targeted to produce 25 lakh tonnes of gur in 1992/93

as against the maximum of 27 lakh tonnes in the preceding year. Both the
targets of area and production have been exceeded by 8.0 and 8.6 per
cent, respectively. the major concerns are with cost economies, and
institutional arrangements for processing and disposal. There are varietal
improvement to bring in high yielding cane varieties such as CO.6304 and
CoC 671 which have performed well in farmers' fields and enjoy greater

81
appreciation. During the early years, in 1972173, the Coimbatore canes were
dominant with average productivity of 85.25 tonnes per hectare. When the
new variety Co.6304 reached 49 per cent of sugarcane area in 1979/80
the average yield shot up to 103 tonnes per hectare, a quantum jump by
21 per cent. However, no tangible improvement in the recovery could be
noticed until a new sugar rich variety CoCo 671 was brought in 1975. This
variety has placed the State at the top of recovery map of India. The
average sugar recovery has jumped to 9.54 per cent in 1984/85 from 8.25
per cent in 1972/73. These varieties have some limitations of flowering,
lodging and poor performance under too adverse conditions. There are new
sugarcane varieties in pipeline and research focus has been on
development of short duration varieties of eight months duration to fit in
new cropping pattern or sugarcane based farming system. Evaluation of
cloans with different characteristics for drought resistance, responsive to late
manuring due to climatic aberrations, shade tolerant, suitable for ethanol or
bio-gas production, for quality jaggery production, suitable for saline and
alkaline soils, and affected by tannery effluents are some of the dimensions
of varietal development being atempted now.

e. Cotton

Cotton accounts for 4 per cent of GCA and 12 per cent of the area
under non-food crops over the years. Since 1951/52, cotton area has been
decreasing from 3.8 lakh hectares in the fifties to 2.6 lakh hectares in the
nineties, a change of 0.9 per cent a year, from point to point. The decadal
variations are small at (-)7.9 per cent with eighties over the seventies, and
11.4 per cent in nineties. Yield has increased from 141 kg in the fifties to
283 kg in nineties, at 1.8 per cent annually. The significant changes have
occured during the sixties and seventies. The trends in area, production
and productivity of cotton crop over a period from 1950/51 to 1992/93 are
presented in Table 42.

Table 42 : Estimated Trend, Growth and CV in Sugarcane

Trend Growth CV
B C B C
--
Area -0.0165 -0.00743 -1.73 -0.7 23.5

Production 0.00315 0.01052 0.3 1.1 24.8

Yield 0.01956 0.01810 2.0 1.8 29.9

B - Simple Trend, C - Adiusted

Around 45 per cent of cotton area is irrigated and classwise, the

82
share decreases as farm size increases. The cotton area has decelerated
by 0.7 per cent whereas its production increased by 1 per cent but
statistically not significant. Productivity has however gone up by 1.8 per
cent a year which compensated for the loss due to decline in the area. It
may also be noted that the annual variations are found to be wide with
high amplitudes for yield and output during the seventies and eighties when
cotton hybrids are brought in for cUltivation in an extensive areas, and
prices are widely fluctuating.

The trends are summarized below. The coefficient of variation has

been high in the range between 24 and 30 per cent as about 55 per cent
of cotton is rainfed and subject to seasonal cycles which influence crop
growth. Rising productivity could absorb weather shocks and register high
rate ot growth because of large scale adoption of cotton hybrids in irrigated
areas.

Yield wise distribution of cotton growing districts is worked out and

presented Table 43. The yield gradients are with respect to the general
yield trend and not in reference to predetermined optimum/target yields.

Table 43 : Cotton Yield Differentials and Distribution of Districts in

Tamil Nadu (1992193)

Yield Districts
High (> 350) SA, TVL+, DPI, CBE, TPI, PDK +, TNJ, NGP, DGL

Medium (250350) CHP+, SVG, VLR, ERD, MDU, TIN

low 250) RMD, TTK, SAL, VRN, KKI+

(N8: + Area less than 1000 hal

The high yield districts cover 27.9 per cent of cotton area and 41 per
cent of production in the State, medium yield districts have 24.8 per cent
of area and 24.3 per cent of production but low yield districts account for
47.3 per cent of the area and 34.7 per cent of output where rainfed cotton
is concentrated. Most of the high yield districts have very high share of
irrigated cotton which could explain the yield differentials. In Thanjavur and
Nagapattinam districts cotton is grown mainly in rice fallows whereas in
COimbatore, Tiruchirapalli, South Arcot and Dharmapuri it is garden land
crop irrigated by wells where irrigation is under control. They also produce
long and medium staple cotton, the former having export potential. The
low yield districts have mostly rainfed cotton in black cotton soils with short
staple varieties and the yield of rainfed cotton is approximately one-fourth
that of irrigated crop and to bridge the gap, stress breeding of suitable

83
cotton varieties, besides cultivable practices to manage in situ water
management are needed.

The growth of cotton area is not significant in all districts except

Dharmapuri, Thiruchirapalli and North Arcot where growth has been positive
and high, whereas moderate deceleration is noted in Madurai district.
Growth in yields in seven districts is not significant which means stagnant
yield levels and among the other districts, it is negative and high in
Dharmapuri, Salem and Chengalpattu, but positive and high in
Thiruchirapalli, Vellore, Ramanathapuram and Tirunelveli districts.
Consequently, output growth has been high and positive in Dharmapuri,
Tiruchirapalli, Vellore, South Arcot, Tirunelveli and Madurai. The trend/growth
coefficient which is not significant, implies large variations in area/yield/
production and this happens despite high growth rate which reflects
instability.

Tamil Nadu ranks fourth in the productivity map of India with an

average of 290 kilogrames per hectare as against the Punjab with 463
kilogrames per hectare. Nevertheless, yield stability is the major concern
and varietal choice for stability has its own built in trade-off with yield. India
is ready to participate in cotton exports with 15 lakh bales around as
tradable surplus. For her effective participation anu competitive bargain, cost
efficiency through productivity gains is the bottom line. New haploid varietIes
with resistance/tolerance to drought, and integrated pest and disease
management for cost effective plant protection, bacterial cultures and
biotechnology hold the key for cost effective technology and competitive
advantage.

84
 CHPATER IV
AGRICULTURAL PRICES

4.1 Price Relatives

There are three types of functions agricultural prices perform. First, it

provides for exchange of farm products on sale for a source of income;
second it guides decisions on production and marketing of products
produced in farms; and third, it signals investment into agriculture and inter-
sectoral flows of savings. There is another factor to be noted, however,
and that is, resource allocation is generally guided by a system of relative
prices, not singly by individual prices even though they could have partial
impact.

Seasonal variations in prices over a production cycle are important

and they are managed mostly by intermediaries/traders through managing
inventories. Seasons of gluts and scarcity in markets are often mentioned in
support of small and marginal farmers who have small amount of
marketable surplus to sell and hence they have to be empowered with
countervailing measures. Cyclical fluctuations in prices, particularly farm
product prices, are not wide and significant under tight macro management
of prices, interests and investment; The concern is for inexpensive wage
goods.

Prices of major commodities such as paddy, cholam sugar (gur),

pulses of blackgram and redgram, groundnut pods and cotton kapas have
been analyzed in detail as they are the included crops in programming.
Other crops exhibit similar trends. There is a long time series of price data
for a period of 40 years (1955/56 - 1994/95). To ascertain the price
relations, correlations have been worked and they are presented in the
Table 44 below. '

Table 44 : Correlation Matrix of Prices (1955/56 - 1994195)

(A) Major Crops

Paddy Cholam Sugar Conon Groundnut

Paddy 1.00
Cholam 0.86 1.00
Sugar 0.86 0.95 1.00

Cohan 0.84 0.97 0.93 1.00

Groundnut 0.86 0.96 0.93 0.96 1.00

85
 (8) Pulses

Green gram Black gram Red gram

Green gram 1.00

Black gram 0.97 1.00

Red gram 0.98 0.96 1.00

There has been strong and significant positive association of price

movements over time. The correlation coefficients indicate that paddy prices
associated with other crops to an extent of 86 per cent while other crops
among themselves have association with more than 93 per cent. Pulse
crops have correlation coefficients of 96 per cent or more. The direction
and magnitude of price correlations indicate two important points: one,
prices of all crops included move in sympathy, and second, one would
have to be extremely careful in specifying crops in regression models for
estimating supply functions to avoid heteroscedasticity.

With such high price correlations, estimation of trends over time seems
redundant as the trend coefficients could not explain short term changes
which are important for the present analysis. Changes in a quinquinnium
are, therefore, measured in terms of the difference in prices in the begining
and terminal years of the period. This difference is converted into a rate of
annual change over the period of five years and they are presented in
Table 45 below. The end period is indicated to mark the annual rate of
change over the preceding five years.

Table 45 : Annual Rate of Changes in Prices of Major Commodities

(1959/60 - 1994195), Tamil Nadu

Paddy Cholam Sugar- Ground- Black- Cotton Redgram

cane nul gram

1959/60 24.2 28.6 24.7 29.5 16.9 27.7 (-)16.5

1964/65 2.6 7.5 8.5 7.0 7.8 5.4 12.5

1969170 6.5 2.9 2.9 8.3 2.9 7.1 7.0

1974175 16.9 19.4 3.9 21.4 5.5 0.2 7.8

1979/80 12.6 (-)0.5 11.3 10.1 6.4 4.0 17.4

1984185 4.9 6.5 (-)12 B.6 10.1 4.8 5.3

1989190 -5.7 4.2 7.1 11.1 7.5 8.6 6.9

1994195 9.3 3.2 20.4 5.3 19.9 12.1 17.8

Overall (1955156-1994/95) 8.9 8.1 10.6 14.2 11.3 10.7 6.1

86
 One might note relatively high rates of changes in prices of paddy
during the second half of the 1950s and the 1970s and low and negative
rates during the second half of 1980s. High price charges in prices of
cholam in the second half of 1950s and first half of 1970s. Sugar prices,
in terms of gur, have shown higher rates of change during the second half
of 19505 and first half of 1990s. Variation in groundnut prices do not seem
wide whereas, in the first half of 1990s, prices of pulses have made
significant strides. Excepting the initial and terminal periods, cotton prices
have been changing within a narrow band. Though quinquinnial rates of
price changes have been at different levels and for different crops, the
overall annual changes over the long period of 40 years have been
substantial ranging six per cent for pulses to 14.2 per cent for groundnut
with sugarcane and cotton lying in between (10.6) per cent.) Food grains
have, changes between 8 and 9 per cent.

The real issue raised by farmers is, on the real price, adjusted for
inflation. Componentwise information on price of commodities is not readily
available for long periods. Prices of major commodities are available for 40
years but data on SNDP are available for 1970s with current and constant
at 1970/71 prices and for 1980s and 1990s, current and constant at
1980/81 prices. Since the both series are not comparable due to insufficient
information for splicing the time series data, the latter period of 1980s and
1990s are taken up for analysis. The methods of computation are as
follows.

Construct a SNDP deflator using the SNDP series current and constant
prices.

Deflate the nominal prices using SNDP deflator for arriving at a series of
real prices.

Calculate price relatives setting 1980/81 prices as 100 (1980/81 = 100).

Ideally, the deflator should be net of changes in prices of the referred
commodity. But, for want of relevant data, the deflator used here is a
gross concept.

The results are presented in Table 46 below:

The results show that the estimated real prices of paddy, cholam and
sugar are just one-half of the real prices of paddy in 1980-81, around two-
thirds for cholam four-fifths for sugarcane. Real prices of groundnuts seem
remain more or less the same as in 1980-81. However pulses and cotton
have shown substantial increases in their real prices. Apart form
methodological complexities which might change the results very little, the

87
contention of farmers that real prices they receive for food grains have
been declining cannot be denied outright. Perhaps, escalation of the costs
relatively more than prices could have aggravated the conditions. This could
be mitigated if food grain prices, particularly of paddy are let to hold strong
in market in sympathy with border prices. This raised the relative magnitude
of producer and consumer prices involving question of subsides and welfare
implications about which more will be presented later.

Table 46 : Real Price Relatives for Major Crops during 1980/95 in

Tamil Nadu

Crop Production
Year Paddy Cholam Sugarcane Groundnut Blackgram Aedgram Cotton

1980-81 100 100 100 100 100 100 100

1981-82 105 102 48 104 97 100 107

1982-83 100 98 46 119 113 100 94

1983-84 99 109 74 122 118 112 103

198485 95 103 71 110 122 97 95

1985-86 91 100 65 84 107 84 81

1986-87 88 96 60 110 95 84 75

1987-88 54 98 62 121 101 106 106

1988-89 52 85 47 74 112 81 97

1989-90 47 87 64 99 107 82 86
199091 48 81 56 107 104 93 87
1991-92 46 82 48 107 99 101 94
1992-93 47 83 52 73 86 106 95

199394 56 84 87 99 123 101 128

1994-95 50 64 NA 94 174 142 129

NB : Computed from the data on prices and state income at 1980-81 prices.
Scurce: (DOS, GOTN)
NA : Not Available

The time series of data could be used to analyze farmer's behaviour.

Regression model have been specified to estimate crop area as dependent
variable, area and prices lagged by one period, trend (time) and weather
(Rainfall) as independent variables. The results of supply response
regressions are presented below.

4.2 Supply Response Regressions

The question of farmer's response to price and other economic stimuli has

88
been quite controversial in the fifties and sixties, especially in the
developing economies. Following this, there have been improvement in
methodology and techniques, and data system which have led to significant
research in supply response behaviour. Schultz, Rajkrishna, Nerlove,
Rajagopalan and others have established that farmers behave rationally on
resource allocation in response to prices, depending upon the nature of
commodities. An attempt has been made to test empirically the farmer's
response for the major crops.

RegreSSion models are considered for choice and a linear regression

model has been specified and estimated using OLS assumptions.

For the ith crop,

Areal! = a + b, AREA,.,., + b2 Price,.t-1 - b3 PRICE" . ! + b. GIA, bs RAIN. + be

TIME. + Eit

'Where,

AREA;,. Area of i the crop in time t

PRICE i ,. ! Price of i th crop in time t-1
Pricei,. Price of i th crop in time t
Price J,. Price of j th crop (substitutes)
RAIN. Annual rainfall in time t
GIA. Gross irrigated area in time t
Time. time (1958 = 1, ... , ...... , 1992)
Ej,t Stochastic term with zero mean, and unit variance.
a, b , ..... , b6 are parameters in equation which are to be estimated.

It is postulated that the area under a crop in a year depends upon

the area under the crop in the previous year, expected price of the
commodity and that of its substitute, rainfall of the season, gross irrigated
area and the trend in the area over the period.

The area under the crop in the previous period (year) would
summarize the technical and feasible conditions of production of the crop
and hence would determine the possible area likely to be under production
in the long run. Incidentally, the coefficient of this variable is also specified
as the long run response coefficient in the Nerlovian model of adaptive
expectation with Koyck transformation. The price of the commodity and its
substitute- lagged by one year is assumed, without loss of generality, to be
the surrogate of the expected price of the commodity and its substitute.

Rains influence the decision on the area to be sown and they may

89
reflect either in changes in date of sowing or its distribution spatially or
both. One might prefer seasonal rains instead of annual rainfall for a
specified crop. Since the area is an aggregate of more than one season
under the biomodal distribution of rains in the State, it would seem that the
aggregate of seasonal rains would be a summary measure. Similarly, GIA
is used as total cropped area which would set a capacity constraint of land
and water resources.

Over the period of 35 years, many changes could have occurred in

agriculture. There can be technological changes, social and economic
changes, government directed policy changes and a host of other factors
that have contributed to such changes. It is conventional to specify time as
one of the independent variables to capture the changes specified and
unspecified. Time represents trend which summarizes the changes over
time. In addition, inclusion of time takes care of trend in other variables
which bAcome detrended for use in the regression estimation. The
conventional statistical assumptions of ordinary least square (OLS)
regression model as to error term and interaction between the variables
hold good for the present empirical model.

The empirical results of the supply regressions for the major six crops
are presented in Table 47 followed by discussions.

Table 47 : Supply Response Regressions

51.
No. Crop Constant Area,. I Pricej" Pricej", GIA Rain T R2 DW F

1. Rice 125.9719 0.0565 0.3531 0.3754 0.6633 0.1656 12.3400 0.97 1.7166 160.145
(2.739) (1.225) (1.445) (16.062) (2.656) (-3.440)

2. Cholam 947.2474 0.1179 1.9009 3.5351 -0.1062 0.1369 2.5615 0.59 1.540 9.156
(1.741) (2.243) (-3.341) (-2.447) (2.030) (0.753)

3. Cumbu 425.5768 0.00896 0.7467 0.0089 0.0281 -6.2509 0.8 0.7972 0.7972 34.123
(1.352) (1.186) (0.327) (0.706) (-3.012)

4. Ragi 255.5644 0.0254 0.3617 - 0.0286 0.0196 -8.2653 0.94 0.6856 98.846
(0.508 (2.270) (2.057) (0.910) (8.379)

5. Sugarcane 46.9897 0.2790 0.1751 0.2041 0.0075 -0.0283 3.3354 0.91 1.6388 56.653
(1.908) (2.134) (2.226) (0.630) (-1.3570) (2.020)

6. Cotton 276.7887 0.273 0.5599 -0.1043 00510 -0.0417 -14.5598 0.84 1.3057 30.655
(-0.412) (5.929) (-1.153) (2.587) (1.266) (0.494)

7. Groundnul 375.6258 0.0933 0.0541 03361 0.1648 -0.0779 -5.4066 0.33 0.7412 3.636
(1.522) (0.207) (1232) (2825) (.(l.BI1) (.1.269)

Nole : Figures in parentheses are '" ratios.

90
 It may be seen that for rice area decisions, prices of rice and that of
its substitute have right signs but the regression coefficient of prices are
not significant at five per cent, even though they are significant at 23
and 16 per cent, respectively. There are many reasons for this non-
significance of these coefficients. There have been varying degree of
interventions and the control of price of rice through compulsory
monopoly procurement, traders' levy and restrictions on the inter district
and inter state movement of rice. This could have been a constraint
and a disincentive but one can not be very sure because of the
decision on productivity would compensate changes in rice area.

Second, the variance of price has been rather high, relative to

covariance of area and prices reducing the stability of coefficients.
IntereGtingly, the coefficients of the rice area lagged by one year and
gross irrigated area are significant which would indicate the initial
conditions of nce area decision, and the limits of GIA for extending rice
area. Other things being the same, an increase of GIA by 100 hectares
would be required for the extension of the rice area by 68 hectares.
The dependence of rice sown area on rainfall explains the influence of
monsoon rains on the quantum of surface flow through canals and
tanks as more than 90 per cent of rice in the State is irrigated. The
trend in rice area has been decelerating at 12,000 hectares a year and
this is due to expansion of area under sugarcane, banana and
vegetables. The adjusted coefficient of multiple correlation and F value
have shown high level of significance indicating the robust regression
estimates, besides OW statistic which stfows no serial correlation among
the residuals.

The regression coefficients of the lagged area and trend are not
significant for cholam crop. Prices of cholam and that of its substitute,
cumbu, are significant and with proper signs. GIA is also significant but
with negative sign indicating that an increase in GIA WOUld, ceteris
paribus, induce reduction in cholam area. Rains have significant and
positive relation with the area under cholam. Though the adjusted
multiple correlation has been relatively small, F and OW indicate
significant regression with so serial correlation.

For c4mbu area, only the coefficient of regression for trend alone is
signifi~ant and all other variables are not significant though the
regression as a whole is significant and the adjusted multiple correlation
is 85 per cent revealing that 85 per cent of the changes in the area
under cumbu could be explained by the included variables. There have
been a declining trend of 625 hectares a year in the area under
cumbu. As noted in our earlier discussions in crop section, there have

91
 been declining trend in area but there have also been differential rates
of change among the districts. Further, price differentials between millets
are not wide enough to support the idea of significant area variations.

There have been declining trends in ragi area at 827 hectares a year.
Price of ragi and GIA are significant as they enter through the pool of
nutritive values and irrigated area has positive association. Perhaps, one
would anticipate that among millets, ragi would substitute cholam and
cumbu, particularly cumbu since cholam is a dual crop and continues to
enjoy farmers acceptance.

Price of sugar (gur) and that of rice as a substitute crop have been
significant and with right signs. That the regression coeHicient of GIA is
not significant would seem to imply area increases for sugarcane should
come through substitution and a similar trend could be interpreted for
the nO'1-significance of the sugarcane area lagged by one year. In fact
this is an expressed concern of agricultural development administrators
as to the recent expansion of sugarcane area by substituting the rice
area in the State. However, the problems of cutting and transport on
the one hand and recovery of price proceeds from sugar mills have
slowed down the process to some extent. Moreover, the concern over
food security vis-a-vis increase in sugarcane area could be handled
through increasing productivity of food crops. This would be the major
focus of discussions on price support and food subsidies.

Another point of interest is that there has been increasing trend in the
area ie., 3335 hectares a year, as the sugarcane productivity has been
highest in the country with 110 tonnes per hectare and, therefore,
changes would be in the area. The regression is robust with the
estimated adjusted multiple correlation being 91 per cent, with no serial
correlation and high F-ratio.

The regression coefficient of cotton area lagged by one year is not

significant and it might be due to the predominance of high yielding
improved varieties replacing the traditional des; varieties which were
grown in the traditional cotton belt and in black soil areas. Now, long
and medium staple varieties can be grown in irrigated areas across the
State.

The price of cotton is significant but the price of grotJ dnut, its
substitute, is not significant. Whereas the rainfall coefficient is not
significant, GIA is significant and positive. The trend, however, has
negative but significant coefficient which would mean that the cotton
area has been declining by 14600 hectares a year during the period.

92
However, as discussed earlier, productivity and output have been
increasing. The regression is robust with 84 per cent of variations .in
cotton area being explained by the included variables and with the
errors showing no serial correlation.

Though the regression for groundnut is significant, the included variables

could explain only one - third of the variation in the groundnut area.
Except the regression coefficient of GIA, the other variables such as
price of ground nut and that of its substitutes (cotton), rainfall and trend
are not significant.

93
 CHAPTER V
AGRICULTURAL FINANCE

5.1 Structure

Financing farming activities and agricultural development, the former

being short term and the latter of long term needs, is provided by
commercial banks, indigenous financial agencies, cooperatives, NABARD and
individual money lenders with different degree of participation. It is reported
that most of the short term credit for purchase of inputs/raw materials is
mostly met by the banks, individuals and cooperatives whereas the long
term credit needs for the purposes of land development, farm machinery,
irrigation structures, barn and threshing floors and the like is serviced by
land de\telopment cooperatives, and capital transfer from non-farm sector.

a) Commercial Bank

In Tamil Nadu, commercial banks have transacted, as an average for

three years ending 1993, around Rs. 7141 crores of which rural credit has
a share of 26.4 per cent and the rest by semi urban and urban sectors.
Among the State sub-regions. Regions II and III have Rs. 59.2 and
Rs. 59.3 crores which account for 31.3 and 28.2 per cent, respectively, and
the least Rs.4.1 crores (2.2 per cent) is Region VI. Over the decade
ending 1992/93, there have been good progress in financing by commercial
banks. The emphasis on building banking infrastructure in rural areas has
resulted in opening more (604) branch banks. A five - fold increase in both
bank deposit and bank credit would indicate positive response to
development needs of the State. The progress indicates that

* the annual average increase in the number of bank offices has slowed
down in rural and semi-urban areas in the second half i.e. from 5.1 per
cent to 2.2 per cent in rural sector, and from 2.1 to (-) 0.02 per cent
for the semi-urban; but, the tempo is maintained in urban sector

* the rate of growth in bank deposits has increased from 18.5 to 19.6
per cent in rural areas from 15.6 to 16.9 per cent in semi-urban areas,
and from 17.6 to 20.6 per cent in urban areas.

* the rate of growth in bank credit has declined from 21.5 to 17.5 per
cent in rural area, from 18.2 to 11.6 per cent in semi-rural area; and
an increase from 16.6 to 18.9 per cent in the metropolitan area.

95
Table 48 District Relatives of Clientele, Deposits and Credit from
Commercial Banks (June 1993)

A B C CIB D E
Population Per capita Percapita Per bank Per Bank Credit Bank
Servedlbank deposits credit DepOSits Credit Deposit
(No.)

Dharmapuri 131 41 55 1.34 50 67

Salem 118 110 100 0.91 120 109
Coimbatore 84 273 337 1.23 212 262
Erode 97 133 110 0.83 119 99
Dindigul 100 69 75 1.09 64 69
Madura; 98 106 124 1.17 97 114
Tiruchirapalli 101 107 00 0.92 99 91

Pudukkottal 117 52 47 0.90 52 50

Kanchapurram 143 78 79 1.01 103 104
Vellare 121 72 81 1.13 80 90
Tiruvannamalai 145 61 56 0.92 81 99
South Arcot 125 52 48 0.92 60 56
Thanjavur 108 99 63 0.64 99 63
Ramanalhapuram 122 61 35 0.57 68 39
Sivagangai 78 106 66 0.62 74 47
Virudhunagar 109 83 131 1.58 84 131
Thoothukkudi 80 109 96 0.88 81 71
Tirunelveli 100 96 60 0.63 89 56
Kanyakumari 102 84 69 0.82 112 65
The Nilgris 78 147 342 2.33 106 247
State Number 100 100 100 100 100
(13133) (1957) (1464) (280.3) (208.5)

The parameters to measure the performance of commercial banks in

financing agricultural development are (a) population served per bank
branch, (b) per capita bank deposit, (c) per capita credit, (d) deposit per
bank, and (e) credit per bank. These parameters are analyzed on the basis
of districts. Further, the parameter values are normalized with the State
average as 100 and the district values are drawn in relation to the State
averages and expressed as per cent.
The number of people served by a bank is 84 per cent of the State
average in Coimbatore district whereas 131 per cent of the State average
is covered in Dharmapuri district. The density of bank is relatively high in

96
 those districts which have relatives less that 100. This is simply an indicator
and more could be brought about by referring to bank transactions. Per
capita deposits are high in Coimbatore, Erode, Madurai, Tiruchirapalli,
Sivagangai, Thoothukkudi and the Nilgris districts. But, this trend is not
evident in per capita credit as the credit deposit (C/O) ratio varies widely,
from 0.57 in Ramanathapuram district to 2.33 in the Nilgris district
eventhough the loan recovery has been as low as 40 per cent.

During the decade, the state has maintained high level of banking
development. Maharastra, Tamil Nadu and West Bengal exceeded the all
India average of per-bank credit. Further, the annual growth in per-bank
deposit and per-bank credit are 28.1 and 24.1 per each which are more
than the national average. The relative contribution of the State to bank
developrhent can be summarized as,

* There is a marginal reduction in the percentage of bank offices

established in the State during the second half of the period (1988/89 -
1992/93) ,

* The State's aggregate bank deposits have slightly increased

* The State accounted for higher share in gross bank credit in 1992/93
than the begining of the period.

* The population served by the banks is relatively less, indicating

efficiency and with in the State there has been reduction over the
period.

, b) Cooperatives

i: The short and' medium credit structure in the State includes the
following three tiers.

* Tamil Nadu State Apex Cooperative Bank (TNSACB) at the State level

* Central Cooperative Banks (CCB) at district level (excepting Madras

District)
Primary Agricultural Cooperative Banks (PACB) at village level.

There are - 4655 PACBS functioning in the State which provide short term
loans to farmers in support of cultivation expenses; and medium term loans
tor taking up subsidiary occupations such as dairying, sheep rearing and
poultry farming. Tenant farmers and land less labourers also benefit from

97
the credit. Generally, cultivation loans are limited upto As. 65,000/- of which
loans on personal surety are given upto Rs. 45,000. Cultivation loans cover
the purchase of fertilizers, pesticides and other .:;hemicals, and seeds; and
they are repayable after crop harvests within a maximum period of 15
months.

Medium term loans are repayable in three to five years. The progress
of financing short and medium term needs in summarized below.

Table 49 : Cooperative Short and Medium Term loans Disbursed in

Tamil Nadu

(As. in crore)

Year Short term Medium Term Total Loans issued

cultivation Loans Agricultural Loans
(for subsidiary occupations)

VII Five Year Plan

1987/88 186.82 34.03 220.85

(84.60) (15.4)
;---------

1988/89 205.04 40.14 245.18

(836) (16.4)

1989/90 233.84 41.11 274.95

(850) (15.0)
----
1990/91 24398 40.02
(85.9) (14_1) 284.00

1991/92 278.52 44.71

(86.2) [13.8) 323.23
r---'--- - - - _ - - '-----'
VIII Five Year Plan
--------- f---.
1992/93 340.86 45.7
(882) (11.8) 386.61
r------- ------ -- --- - - -
1993/94 43954 52.65
(89.3) (10.7) 492.19
1---- ---_.
1994/95 fi6174 61.99 623.73
(90.1) (9.9)
----- r---
1995196 561.3"1 65.17 626.54
(89.6) (10.4)
-~------ -- ---~

Note Figures In parentheses are percentage of total

Saure Policy Note on Cooperative Department (1996/97) GOTN, 1996.

Short term credit has increased gradually from RS.187 crores by the starting
year of VII Plan to Rs. 279 crores at the end year of the Plan, at a rate
of growth of 8.3 per cent a year. During the first four years of VIII Plan, it
has. grown from RS.341 crores to Rs. 561 crores at 13.3 per cent a year.

98
Its share of the total credit has gone up from 84.6 per cent to 89.6 per
cent during the period. Medium credit ranged between As. 34 crores and
Rs. 44.7 crores during the VII plan period with annual growth of 5.6 per
cent and from Rs. 45.8 crores to As. 65.2 crores during the first four years
of VIII Plan with an annual rate of growth of 9.2 per cent. Its share in the
total credit has declined from 16 to 9.9 per cent during the period.

The total credit has accelerated at an annual rate of growth of 7.9

and 12.8 per cent during the VII and VII Plan, respectively. Calculated on
the basis of GSA, the credit varies from Rs. 3281 hectare to Rs. 10701
hectare by the end of the period. Generally, one PACB covers two or
three revenue village in its area. In all, PACBs in the State have covered
80.34 lakhs of operational holdings of which 68.27 lakh or 80 per cent
belong tb small .and marginal farmers. Besides, a scheme to enroll atleast
one member from each scheduled caste family in PACM and a membership
subsidy of RS.100 is provided for each such person.

The Central Cooperative Banks (CCB) function at district level financing

PACBs of the district form their own resources and from the credit limits
sanctioned by NABARD through TNSACB, which is the federation of CCSs,.
The TNSACB channalizes the funds provided by NABARD towards short
term loans for seasonal operations, medium term loans for purposes of
agricultural investment, medium term conversion loans for purposes of
agricultural investment, medium term conversion loans and produce pledge
loans Furthermore, it sanctions reimbursement of cash credit limits to CCSs
for business in fertilizers, distribution of essential commodities, and to
support sugar mills and spinning mills.

Based on the guidelines of NABARD, development action plans are

prepared by cooperative banks to build stronger Institutional Credit Delivery
System and are implemented in select cooperative banks. Besides, a
deposit guarantee scheme is adopted by PACSs. The object of the scheme
is to instill confidence in the minds of members of PACBs and the
scheme is applicable with the following features.

* PACBs should have deposit of maturity period of more than six months
to the extent of atleast As. 25,000 per bank at the clOSing year

* The accounts of banks are regularly maintained

A corpus fund of guarantee fee is established in CCB with the following

contributions
- PACB : 0.15 per cent of total deposits

99
 - DCCB : 0.10 per cent of total deposits

- SCB : 0.05 per cent of total deposits

The fund should not be used for any other purpose except for
settlement of claims.

The Comprehensive Crop Insurance Scheme is under implementation

in the State since 198.5/86 to protect the farmers affected by natural
disasters. Under this scheme, 100 per cent of crop loan, subject to a
maximum of RS.10,000 per farmer, disbursed through cooperative banks,
commercial banks and regional rural banks in the notified blocks for paddy,
wheat, millets, oil seeds and pulse crops, is insured on Cbmpulsory basis.
The premium is two per cent of the sum insured for oil seeds and pulse
crops. Small and marginal farmers enjoy 50 per cent subsidy for the
premium. The scheme covers paddy, cholam, cumbu, ragi, groundnut,
gingelly and sunflower crops.

ii) The long Term Credit Structure has a two-tier system: a) Tamil
Nadu Cooperative Land Development Bank (TNCLDB), and b) 181 Primary
Land Development Bank (PLDB) at taluk/block level. These credit institutions
provide credit on long term basis for minor irrigation development, cultivation
of plantation crops, poultry, dairying, sheep breeding, tyre carts, sericulture
and others on schematic basis. In addition, PLOB finances repairs to wells,
laying of pipe lines, purchase of tractors, power tillers and lands
construction of farm houses and cattlesheds. The period of repayment
varies from 5 to 15 years. TNCLOB has formulated many area development
schemes under irrigation development programmes. It is also offering
training programme, supported by NABARO, for junior level staff at Mddras.

PLOBs are getting the needed finance from the State Land
Development Bank, the apex institution. There are 181 PLOBs of which 180
have secured unrestricted landing eligibility as the recovery percentage was
60 per cent and above. The achievements of PLOBs during VII ad VIII
Plan periods are given below.

It could be seen that the achievements have been progressively good

with the annual rates of growth being 6.39 and 30.96 per cent during the
VII and VIII Plan, respectively.

c) National Bank for Agriculture and Rural Development (NABARD)

Specially created by an Act of Parliament in 1982, NABARO has a

mission of promoting sustainable and equitable agriculture and rural

100
development through effective credit support, institution building and related
activities. There are three broad categories of activities such as credit
dispensation, development and regulation; and it refinances short, medium
and long term credit. NABARO is involved in the preparation of potentials
:inked credit plan which forms the basis of district credit plan, in the
finalization annual district and state plans, and in monitoring the
implementation of the plans. It also lays terms and corditions of refinancing
the credit institutions.

Table 50 Programme and Achievement in Long-term Credit in Tamil

Nadu (1985/86 - 1995196)
(Rs.in crores)

Plan Perfod Year Programme Achievement Growth in Plan

VI Plan 1985/86 20.00 24.19

1986/87 20.00 20.52 -790

VII Plan 1987/88 26.00 30.60

1988/89 27.00 29.94

1989/90 30.00 25.97

1990/91 25.00 31.31

1991/92 32.00 41.71 6.39

VIII Plan 1992193 41.00 64.21

1993194 49.50 112.85

1994/95 130.0U 150.02

1995/96 170.00 188.83 30.96

Source : Policy Note on Cooperation Department, 1996

Short term refinance is provided to SCBs, RRBs and commercial

banks, as approved by RBI, for their financing agricultural production and
marketing, m~rketing and distribution of inputs, and production and
marketing of rural industries and ancillary industries and other rural non-
farm enterprises. The period of credit is upto 12 months.

Medium and long term refinance is done to SLOBs, CBs, SCBs and
other financial institutions approved by RBI. The purposes cover a wide
range of activities such as investment in agricQlture and allied activities like
minor irrig-ation, farm mechanization, land development, soil conservation,
plantation / horticulture, forestry, dairy, poultry and other livestock production
and management, infrastructure for storage and mark~ting, bio-gas and,
other alternate sources of energy, sericulture, agriculture, and other

101
processinQ and service activities, investment in rural, small scale village and
cottage industries; involvement of NGOs in development projects and
poverty alleviation programme; and investment in capital/securities of
institution concerned with agriculture and rural development.

The credit may be availed upto a period of 15 years. NABARD

refinancing ranges from 50 to 95 per cent the balance being met by
borrowing institutions. NABARD provides for conversion and rescheduling of
refinancing under extreme conditions of drought, flood, famine or other
natural calamities. Besides, it provides direct finance to state governments
and state sponsored corporations for infrastructure projects. The major thrust.
areas of concern are removal of regional imbalance, monitoring of
implementation of sanctioned projects, and high-tech and export oriented
projects, and consultancv services.

NABARD helps cooperatives and RRBs to review and develop

operational plans, imparting their staff the needed orientation and training in
recognized training institutions such as Banker Institute for Rural
Development (BIRD), National Bank Staff College, College of Agricultural
Banking and others.

* Minor irrigation, including micro irrigation and ground water management

and related fiscal and administrative policies.

Land Development, including watersheds, wastelands, reclamation of

problem soils, soil and water conservation.
.. Plantation and horticulture, including development of fruits and
vegetables, tea development, commercial floriculture, quality nursery,
popularization of medicinal plants, processing and export.

Animal husbandry, including dairying, fodder, poultry development and

other small animals development.

Fisheries, including fresh water acquaculture, shrimp farming, marine and

capture fisheries.
. Rural non-farm sector which includes ready-made garments, handlooms,
powerlooms, silk industry, leather industry, electronic industry, and gem
industry.

* Cooperatives which provide credit of all terms and purposes.

102
The ground level credit, sectorwise and agencies wise, indicates that a total
credit of As. 2319, As. 2892 and As. 3480 crores have been provided by
NABAAD during the years 1992/93, 1993/94 and 1994/95, respectively. The
share agriculture and allied sector for the years has been 64.8, 64.7 and
61.0 per cent, respectively and the share of the credits for agricultural and
allied sector are,

1992193 1993/94 1994195

Commercial Banks 64.4 61.8 62.5

RRBs 1.9 1.7 2.0

CCBs 30.1 32.2 31.3

SLDB - 3.8 3.1

, 0.5
Others 3.6 1.1

One could note that the total credit for agricultural and allied sectors
has been declining over the three years eventhough the total credit has
been increasing by 50 per cent in all, at an annual rate of growth of 14.5
per cent. Further, the share of commercial banks in the total credit made
available to agriculture and other sectors has been declining over the
period from 64.4 per cent to 62.5 per cent. As regards cooperatives, there
have been marginal addition of 2.1 per cent between the first two years
and a fall of 0.9 per cent in the last year. There has been margir.~1
reduction in the share of SLDB.

Pursuant to the recommendation of the Parliamentary Committee on

Agriculture, NABARD has constituted Cooperative Development Fund for
providing assistance to cooperative credit institutions.

The broad purposes are :

Supporting the efforts of PACBs and PLDBs in resource Mobilization.

Human resources development.
Building better management information system.
Conduct of special studies for improving functional efficiency.

NABARD has been taking the training expenses incurred by junior

level training at Junior Level Training Centre, also hy Agricultural
Cooperative Staff Training Institute for training SCB and DCCB personnel. It
has started organizational Development Initiative Programmes for cooperative
banks to bring out attitudinal changes in approach to work, thinking, team
building, and problem solving capacity.

103
 Vikas Volunteer Vahini Programme - Farmer Clubs, 14 in number in
nine CCBs are being supported. The activities have to be planned carefully
for successful functioning of these units. NABARD discusses issues
pertaining to cooperatives with the State Government annually. The points
for action on MOU and Development Action Plans are also being discussed
and monitored in the State Level Monitoring and Review Committee
meeting on a quarterly basis.

5.2 Financing Agriculture

Around 51.3 per cent of sample farms have reported to have

borrowed loans / funds for purpose of cultivation from various sources.
They have also reported their preference of sources and reasons for the
same.

For the purpose of the present analysis, the borrowers are grouped,
on the basis of their borrowing amount, as Small RS.5000), Medium
(Rs.5000-Rs.10000) and Large (>Rs.10000) borrowers. The period of loans
is classified as short (upto 15 months), medium (upto 5 years) and long
(more than 5 years). Further, purpose of loans are grouped as purchase
seed, fertilizer, chemicals, plant protection, animals, machinery and
consumption. The sources are specified as 'cooperatives, Commercial banks,
money lenders, traders, relatives, and input suppliers. The reasons for
preferring a source are grouped as quick disbursement, less cumbersome,
less transaction cost, adequate lending and some combination of the
above.

Period

One could note that 78 per cent of borrowings has been for short
term, followed by medium (17 per cent) and long term (5 per cent) loans.
Classwise, small borrowers have 41 per cent of their borrowings as short
term, 39 and 20 per cent as medium and long term loans; medium
borrowers have more of medium term loans (43 per cent) and large
borrower have larger share of long term to (67 per cent) loans; and large
borrowers have also 35 per cent of short term loans.

Purpose

Purposewise, 42 per cent of borrowers have purchased fertilizers, 19

and 14 per cent of them have used for seed and plant protection
chemical. It may noted that about 13 per cent of them have used for
consumption, probably of cash component of loans which would. be 50 per
cent of loans. As there' could be more than one purpose for a borrower,

104
horizontal addition may be more than the number of borrowers. Around 29
per cent of small and medium borrowers use loans for seeds and for large
borrowers it is 42 per cent. Larger number of small borrowers go for
purchase of fertilizers and chemicals, animals and machinery such as carts
and ploughs. The purpose of consumption is revealed more or less to be
similar in all classes.

Source

Among the various sources of lending, cooperatives account for 41 !Jer

cent, followed by money lenders (26 per cent) and commercial banks (20
per cent). Small borrowers depend relatively more on moneylenders and
relatives, and input suppliers whereas large borrowers depend relatively
more on I
commercial banks and cooperative whereas medium borrowers
prefer relatives, cooperatives and money lenders in that order. It has
become obvious that small borrowers have all the loans from traders and
mostly input suppliers and their dependence would constrain selling in
mt<:-ket as they mean tie-up sales in most of the cases. One would feel
that large borrowers benefit frOm institutional credit whereas small borrowers
resort to cooperative and private individuals in most of the cases and
medium borrowers use all the sources.

Why borrowers prefer a source for their credit? Twenty-six per cent
feel quick delivery is important, 23 per cent feel adequacy of credit also
important; and for others the official procedures and transaction costs
matter. Overall, time and adequacy norms seem relatively more important.
The cost including interest rate is relatively of less concern.

In sum, small borrowers in general use short and medium term loans
for purchase of fertilizers, chemical and implements mostly from money
lenders, relatives traders and input suppliers because credit from them are
quick, less cumbersome and adequate. Large farmers borrow long and
short term loans for machinery, seeds, animals and consumption primarily
from commercial banks and cooperatives as the transaction costs are
relatively less, and credit available has been adequate. A combination of
the above is important as they could manipulate and secure better
consideration. Medium borrowers prefer cooperatives and relatives, and
commercial banks for loans for purchase of seeds, fertilizers and animals;
and their preferences are conditioned by availability of credit with less
transaction costs and quick delivery.

The situation of development finance clearly shows the existence of

institutional and individual sources of credit having their shares determined
by the size and types of finance required. The advantage of less

105
transaction cost and transparent pro~edures seems apparent but it gets
reduced due to cumbersome procedures and documentation which cause
delay in credit delivery, and lack of information. Cooperatives in the State
are managed by bureaucrats for more than three decades and
democratization and humanization of these organizations have become more
relevant and than ever before. Efforts for a revision are seen in draft bill
tor reorganization of cooperatives in the State and this would help
streamline the roles and functions of cooperatives in the State.

e) Case studies

Borrowers perception

Borrowers have choice of sources and decision on the choice

depends upon what borrowers need and how efficiently they are provided.
Case stuC;;es of 23 farmers have been compiled and presented in Table
51. The beneficiaries have been asked to indicate how much they have
borrowed, from which source and for what reasons, and how they are
benefited and how much. These questions were asked as a general
framework but their opinions have been open ended. There are several
methodological issues. First, there has been divergence between what crops
for which credit has been obtained and what crops they have used on
their farms for there could not be any restrictions. Therefore, it is not
possible to estimate strictly benefit cost on crop basis but has to be
reckoned on overall basis as farm incremental income as in partial
budgeting. Second, there can be no control to compare with the benefits
as inputs such as seed, fertilizers and chemicals have positive doses which
vary with farms. Therefore, the out turn which is product of prices and
output of which the latter varies with efficiency, could be a proximate
surrogate of benefits of investment which vary with farms. Third, the
opinions of respondents are indicated unedited. The borrowers are classified
on the basis of amount borrowed. Among 23 borrowers, 22 per cent have
borrowed less than Rs. 3000, 26 per cent between Rs. 3000 and
As. 6000, nine per cent between Rs. 6001 and Rs. 10,000 and 43 per
cent have borrowed more than 10,000. The large borrowers of more than
Rs. 10,000 each dominate group (vide Table 53). The sources of credit
have been mainly primary agricultural cooperatives, fallowed by commercial
banks, regional rural banks, money lenders and sugar factories.

It is also the case that the borrowers have been conscious of the use
of credit. As the cases studied are with varying background, individual
study is rei avant. Therefore grouping is done on the basis of the ratios for
convenience. Mr. Ramasamy and Rangasamy of Dinnamalikunru have
suffered from failure of rains and they have lost the cotton crop.

106
Mr. Alagarswami of Palayampatti has poor rice yield due to water stress
and could not realize his investment fully. On the other hand, those who
have grown crops such as sugarcane, maize and coconut could get larger
margins because of good crop and high prices.

The opinions of respondents are broadly listed under 16 items and

they are listed in Table 52.

Forty-eight per cent of the respondents have expressed that they have
not have adequate funds to meet cultivation expense and they depend on
credit. Among the sources of credit, Primary Agricultural Cooperative Banks
are preferred by 22 per cent because of easy accessibility and familiarity.
They also prefer commercial banks for jewel loans .. However, there are
some limitations in PACB system which need to be looked into and they
are : (i) the cooperatives take long time to get the loans sanctioned and
disbursed (17 per cent) and more often, the loans are available so late (57
per cent) that farmers convert the kind portion of credit into cash by sales
tc recover the cost of inputs on which they had spent already and they
lose considerable sum due to underselling. This contingency could have
been avoided through making credit in time or through providing full cash if
credit is delayed. Sometimes, it is felt (9 per cent) that price of fertilizers at
the cooperatives is relatively higher than in market.

Anoth~r difficulty is related to complex rules and procedures involved

in lending as felt by 17 per cent of borrowers, which needs to be
simplified. A pass book system would reduce' much of the need for
vexatious procedures and one can borrow either from cooperatives or banks
because of reduction in transaction costs.

Among many suggestions on rate of interest, 17 per cent felt for

reduction in interest rate, as borrowing from money lenders would be easy
but would involve borrowing at very high rates of interest. Other
suggestions include extending of repayment period taking into consideration.
(26 per cent); not adequate funds are available from PACB (22 per cent)
and therefore the scale of finance may be increased. Overall, the general
concern seems to be about the availability of timely credit (61 per cent).
The policy implications include the need for innovative institutional changes
designed in co-operatives, banks, insurance and input delivery system such
that credit and input delivery system such that credit and input services are
available in time and under simplified conditions of lending procedure.

107
 g
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c:
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108
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110
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111
 Table 52 Opinions about Institutional Lending

S. No. Opinions Percentage of

Respondence

1. Do not have adequate funds 47.8

2. PACB is within the village, it is very easy for us to get loan 13.0

3. Prefer to get loan from PACB. Next is Jewel loan from Commercial Bank 21.7

4. Influenced people only get the loan early 8.69

5 PACB - takes long time for giving loan 1739

6. Fertilizer is not available well in time 56.52

7. In society, fertilizer price is high compared to traders 8.69

8. Getting loan involves a lot of rules and regulations 17.39

9. Low interest in bank compares to well co-operatives 8.69

10 Getting money from money lender is very easy, but interest rate is high 4.35

11. Reduce interest rate 17.39

12. Increase amount of loan per crop 17.39

13. Repayment period should be increased 26.08

14. Crop Insurance facilities should be given to all crops 13.04

._--_._--
15. Not getting adequate funds from co-operatives / banks 21.74

16. Credit should be available well in advance 6.86

Table 53 Distribution of Borrowers

Class of Borrowers Number of Farmers Amount of Credit (Rs.)

--
Rs. < 3000 5 (22) 2968.00

Rs. 3000-6000 6 (26) 5333.00

Rs. 6000-10000 2 (9) 9000.00

0--
Rs. > 10000 10 (43) 26443.00

112
 CHAPTER VI
CROP ALLOCATION MODELS

6.1. Preliminaries

Agricultural policy is a course of action as pursued by a government,

organization and individuals, as the case may be, which seeks to bring in
a set of desired changes in agriculture. The changes may concern about
production, processing, marketing and the like, and they may be broadly
decided as desirable by the society in which producers, consumers, and
traders in between, are active members pursuing economic and service
activities for a gain. In agriculture, government decided on its goals as
achievement of food security, securing grater employment, including high-
tech agticulture, providing for transfer of technology and organizing the
related services, introducing institutional reforms such as land reforms,
regulation of tenure and share cropping, price support, wage fixation,
taxation and the like and still the list is necessarily incomplete. The
objectives of the government are maximization of agricultural output,
employment and income through high productivity subject to sustainable
food security. Organization sets its goals on the basis of the article of
association and in response to government stimuli to maximize the utility of
its members/clients as manifest in their profit, welfare and satisfaction. It
participates in economic agenda of the State and facilitates the
accomplishment of the stated goals of the government, and the other
partners in the game.

Farmers, as individuals, seek to maximize farm income, and on-farm

employment of family members such that family income is augmented.
There are two aspects: (i) that government and organizations decide on
their policies which have bearing on farmers and. their likely behaviuour and
they are exogenous to agricultural systems and (ii) that farmers decision
are primarily endogenous to the system and the interaction between the
two sets in motion, activates the egricultural development process. In State
planning context which tends to be top down in approach hither to, policies
are decided on macro economic considerations and disaggregation follows
on the basic assumption that farmers would adopt them automatically or
could be induced to accept. On the other hand, if decentralized planning
and bottom up approach is in process, farmers' economy, market is
assumed to sort out and arbitrate the decisions of government, organization
and individUgls after a pause for interaction. If conditions of free market are
vitiated, then government has to intervene to check and regulate the market
and establish the conditions Of parity, fair and orderly markets.

Institutions are evolved over a period through social experimentation,

113
political interaction and contractual settlements. They link the past to the
present, evolve base for conflict resolution and consensus building. A few
thousand hectares of land do not mean anything but a bunch of numbers
and what matters most is the way the land is owned, operated and under
what conditions of contract. Similarly, a worker is not solely identified by
physical exertion capabilities but significantly included are the skills,
knowledge, training and other motivational factors which are ~nfluenced by
institutional factors. Thus, one could note that there are three kind of
actors/agents and a set of institutions are involved in policy formulation.
How policies are acted upon by whom and what kind of strategies are
drawn and implemented and with what results and their social and
economic impact are the questions one is really concerned about. In the
rest of this chapter, attention will be focused on policy, strategies and
implementation of them in agriculture Tamil Nadu. The focus is limited to
crop sector only and, therefore, all the discussions and conclusions about
future growth and options will be related to crop sector only.

6.2 The Issues

The issues of agricultural development in Tamil Nadu could be

summarized as under:

Agricultural development needs to be on a sustainable basis such that

growth in resources must be continued with little depletion and degradation
in quality of resources while supply of land resources seems to have
reached its limits of growth, particularly its availability for agricultural
purposes and on the other hand, the demand for land resources for non-
agricultural purposes is expanding. Real estate, industrial and factory space,
schools, hospitals, expanding roads, railways and recreation set their
demand and compete with agriculture.

Development of wastelands through conservation, leveling, bunding and

greening holds potential for addition to the existing NSA. Particular
constraints are that waste lands are not always contiguous in spatial
dispersion and they are widely scattered in bits rendering investment in land
development costlier, though not difficult; second, land institutions are weak
and attenuated and their reorganization and strengthening would add
support for the investment and management; and third, decisions for
allocation of the developed land, again jointly done, in advance would help
to perceive the likely benefits and beneficiaries, their participation and cost
in a social context, beside economic concern.

A class of wastelands, created due to impeded drainage, accumulation

of chemical salts, and soil pollution may need a different approach for their

114
reclamation and conversion into normal
investment would go a long way. Most
bottom land with drainage constraints,
down the unwanted salts. Technology to
soil and water situation is necessary.
and productive soils. Subsides for
of these lands, excepting those of
suffer for want of water to leach
handle such problems for different

Water resources are limited in supply and surface irrigation, by canals

and tanks, has reached its limits and its use efficiency can be improved
through modernizing their structures and management. The system of
Kudimaramat needs to be strengthened to keep the water ways and
channels clear and usable. Institutions such as irrigators' associations are
useful as they are mobilized to manage the irrigation systems for supply of
water, their operation and management, for water pricing, and collection of
water charges; and to institutionalize the management roles.

Cropping patterns undergo changes in response to demand conditions

and supply feasibilities. Income changes, tastes and preferences of
consumers have changed the cropping patterns a little until recently.
-.echnical breakthrough in shortening growing period and breaking photo
periodism have opened new opportunities for higher cropping intensity and
new high value crops. Potential for new crop mix, diversification and vertical
and horizontal crop geometry which optimize the use of land and water
resources exists with employment and security implications.

Recent developments in horticultural sector warrant intensive efforts for

increased output to meet both domestic and export demand, offering new
opportunities and options. The factors that make fruits, vegetables and
flowers perishable are to be eliminated through processing, and cold
storage. There exists wide technological gap in production, processing and
marketing of horticultural crops, which n~ed to be bridged through
investment and management upgradation.

Ensuring sustainable agriculture in the State through optimum

combination of organic and chemical fertilizers, bio pesticides and integrated
pests and disease management.

Organize and foster dynamic changes in agriculture through building

linkages with rural non-farm sector, industrial and service sectors, and with
optimum investment, saving and consumption packages. Then, one could
visualize _a vibrating farm sector in the cumulative orbit of growth.

The issues of development, as indicated above, need policy treatment

and evolution of packages for experimentation in agriculture. In the past,
experimentation with technical solutions has been direct and open involving

115
farm leaders and opinion makers. The other matters concerned with
institutions, social interventions and changes have been treated haltingly
with utmost caution and trepidation virtually ending up with inaction and
inertia.

This is not unexpected as the letter is nested with complicated strands

of social mileu, contract compulsions, and interactions that are likely to
result in social upheavals and disorder, which may take time to settle
eventually. The government and statesmen of independent India have
progressively inclined to be wary and cautious to meet the social issues
straight away in achieving the goals. The fall and rise of Panchayat Raj
and the related institutions have eminently summarized the biased mood of
the nation until the nineties and upto the period of 73rd and 74th
Amendments of the Constitution of India.

Awareness of the critical aspects of resource conservation and use

and the need for sustainable agriculture on the supply side and the
emergence of powerful multimedia and information transfer in aid of demand
side reveal the need for changes, that too in quicker pace, and economic
compulsions, instigated by political polarization, which ha"'ve to be internalized
in developing agriculture.

6.3 A Model

A development process bring in three interactive and mutually

minforcing sets. They are resources, technology and institutions.

Resources such as land, water and human beings are fixed for a
given time but they can be increased/diminished over time as a result of
conscious decisions taken by actors of development. Their magnit(.;des vary
vertically through improvement in efficiency which is a process of intensive
farming; and horizontally through extension through substitution and
augmentation. Through skills and training on motivation and work
participation human resources are improved. Technology covers agricultural
production, processing and marketing techniques available for use and
indeed it is a composite of packages of practices designed by R&D
organizations. However, technology can be partitioned as high, medium and
low and intermediate, factor saving/using, specific, locational and universal
on the basis of the relation with resources. More significantly, this set
includes only those technologies readily available for transfer and adoption.
Moreover, they are supported by the needed investment and it would be .
financially feasible, economicaily viable and adequately capital augmented
technology package.

116
 The interaction between resources and institution determines resource
availability and potential for its growth. Land reforms, land and watershed
development, organizations, irrigation management by State and irrigators,
regulated markets, financial agencies, research and development organization
are some of the institutional dimensions. Education and health can be
added to this set since resource quality is influenced by them. Resource
availability in physical and qualitative terms is moderated by the elements of
institution set. Likewise, the appropriateness or relevance of technology,
supportive investment activity, availability of technology packages, feasibility
of factor substitution are influenced by institutions.

For a given set of resources and technology, the size of interaction

between them is essentially a function of economic and political factors
which I are in flux for ever and therefor8 the optimal interaction output is
momentary and dynamic. Nevertheless, since institutions are slow in
changing and some adjustment lags to go with, the momentary equilibrium
could be stable over a period/production cycle. In agriculture, output
deCisions are made with reference to the supply/availability of resotfrces in
the context of technology likely to be transferred, and among the resources,
land and water and basic and limitational.

m n
i) Maximize Z = L L Pij Xj - Cij Aj;

= 1,2 ....... , m : Resources

= 1,2, ...... , n: Crops

ii) Subject to L aij Xj 5 bi

Xj ~ 0

iii) Where,

Z Income in crores rupees

Pij Price in rupees per unit of crop product of crop.
Xj - output of crop per hectare
Pij Xi Gross income per hectare of crop
Cij Input cost per hectare of crop;
aj Area under crop j
Cij Aj Cost per hectare of input i for crop
(Pij Xj-Cij _Ai) Net income per hectare of crop j
aij Policy instrument for input i for crop j
bi Resource (ith) of region.

117
The conventional wisdom in agricultural development planning would set
output targets consistent with the national objectives and the policy is
oriented to achieve the set targets. Currently, a new paradigm of Agro-
Climatic Regional Planning states that planning, decentralized as it were,
starts with resources and proceeds on asking whether resources are used
fully, whether resource development has reached the limits; given
technology, institutional framework, and prices, how to optimize the resource
use. This resource - oriented objective aims at the art of feasible for
maximum income and employment with in sustainable agriculture. Sensitive
analysis is done to scan the varying optima with reference to changing
institutional conditions, and for different level of resourc!es.

The issue may be framed as, optimizing the use of land and water
resources, under varying levels of technology and institutional parameters,
and generate options for making decision on agricultural development. Crop
yield/productivity is taken as surrogate of technology with given resources.
For the present analysis, resource levels are varied to determine optimum
crop plans. "

6.4 Base Level Solution

The above linear programming model is used to determine the

optimum allocati( n of land resources among the competing crops in each
region. The net return row is calculated using the field data collected under
the Cost of Cultivation of Principal Crops scheme in TNAU and discussion
with experts. Net returns per unit area (hectare) is the difference between
gross returns ie. crop yield multiplied by price, and the cost of production
{operational) of the crop.

* assumption made are that the existing areas are set as lower bounds
and

* technology and institutions remain invariant over the period of production

cycle.

The results of the base solution is given in Table 54.

The results indicate the following :

(i) Around 73 per cent of rice area is concentrated in Regions II (22

per cent), III (32 per cent) and IV (19 per cent) and when compared to
normal area under rice, the difference between normal and optimal area
has shown reduction in rice area in Region IV by 0.70 lakh hectares.
Region VI is a rice area, though small, mostly under tank irrigation, does

118
not appear in the optimal solution. This is relatively a more stable rice
basin than that of Region I. Perhaps, more detailed partition of area on
the basis of growing seasons such as KuruvailKar, Samba, Pishanam,
Tha/adi and summer could lead to improvement in the base solution.

Table 54 : Optimum Allocation of land Resources for

Crops in Tamil Nadu
(in lakh hectares)

51. Regions
No. Crops
I II III IV V VI State

1. Rice 2.26 4.58 6.65 3.96 3.16 0.01 20.62

(11.0) (22.2) (32.3) (13.2) (15.3) (0.05)
I
2. Chofam 1.08 3.03 0.36 - 1.36 - -
(18.5) (52.0) (6.2) (23.3)

3. C mbu 0.18 0.71 1.00 - 0.32 - 2.20

(8.2) (32.3) (45.5) (14.5)

4. Maize 0.11 0.33 0.04 - 0.02 - 0.49

(22.4) (67.3) (8.2) (4.1)

5. Ragi - 0.18 0.29 - 0.09 - 0.57

(31.6) (50.9) (15.8)

6. Pulses 2.92 4.74 4.51 1.09 2.60 0.04 15.91

(164) (29.8) (28.3) (6.9) (16.3) (0.30)

7. Oil seeds 3.86 7.07 5.93 0.81 1.43 0.58 19.67

(19.6) (35.9) (30.1) (4.1) (7.3) (2.9)

8. Sugarcane 0.31 0.66 1.05 0.20 0.12 0.30 2.64

(11.7) (25.0) (39.8) (76) (4.5) (11.4)

9. Vegetables 0.63 0.41 0.32 0.15 0.09 0.01 1.55

(40.6) (26.5) (20.6) (9.7) (5.8) (0.6)

10. Fruits 0.29 1.00 0.67 0.11 0.31 0.08 2.47

(11.7) (40.5) (27.1) (4.5) (12.6) (3.2)

11. Hort. Trees 0.56 3.51 1.28 0.60 4.30 0.01 10.27
(5.5) (34.2) (12.5) (5.8) (41.9) (001)

12. Forest 0.20 1.02 0.32 0.15 1.16 0.01 2.87

(7.0) (35.5) (11.1 ) (5.2) (40.4) (0.3)

Total 12.64 27.83 22.44 6.93 15.30 1.14 86.25

(14.7) (32.3) (26.0) (8.0) (17.7) (1.3)

NB : Figures In parentheses are regions share of the State.

(ii~ Cholam is grown mainly in Region II (52 per cent). Region V (23
per cent) and Region I (19 per cent). There is a quantum jump in Region
V by approximately one lakh hectares over the normal area. The general
trend is approximately one lakh hectares over the normal area and it

119
shows a declining growth (1.3 per cent) in the crop area. The area may
be divided into irrigated and rainfed and the optimum could be determined.

(iii) Around three-fourth of the area under cumbu is in Regions II (32

per cent) and III (45 per cent) and they are similar to the distribution of
normal area but the area has come down by about 0.5 lakh hectares. This
confirms the general deceleration (2.1 per cent) in cumbu area over the
period due to crop diseases mainly in irrigated crops. Separation of
irrigated area from that of rainfed might give some additional information.

(iv) Maize is predominant in Regions II (67 per cent) and Region I

(22 per cent) and the State area is only 0.49 lakh hectares or 0.6 per
cent of total area. The crop could be combined with other millets

(v) Nearly 83 per cent of ragi area enters Regions III (51 per cent)
and II (32 per cent) which are traditionally the ragi belt. Ragi drops out of
Region I which is known for extensive area under rainfed ragi. This
indicates the need for separation of rainfed area.

(vi) Among the pulses, blackgram is grown in large area in Region IV

which has only 6.9 per cent of the area. It would appear necessary that
blackgram and redgram could be separately considered from total pulses to
bring out regional specialization.

(vii) Oilseeds are dominant in Regions II (36 per cent). III (30 per
cent) and Region I (20 per cent). Since groundnut is a major oil seed both
under irrigated and rainfed conditions it is necessary to specify the crop
separately.

(viii) Sugarcane shows better pattern of distribution among the regions

in the optimal solution than the normal area. Nearly 76 per cent of the
area is included in Regions I. II and III where its share of normal area is
84 per cent.

(ix) Vegetables and fruits occur in Regions I. II and III in the optimal
solutions and they are the horticulturally progressive regions of the State.

(x) Normally. Regions I. II and III have around 82 per cent of forests
area and by the very nature of establishing forests. the area could not be
reduced annually. Nearly 40 per c~nt of forest area has entered in Region
V at the cost of Regions I and III. The solution suggests reduction of area
by 5.2 and 4.0 lakh hectares in Regions I and III, respectively. Large
partition of land area and specification of lower bounds could help to arrive
at an acceptable and better solution.

120
6.5 Variable Resource Programme

Resource development, particularly that of land and water, has thus

become the focal point of agricultural development. Land resources, with
many competing demand around, have limited area for utilization in
agriculture. As was discussed earlier in detail, there are three venues of
development and utilization. They are development of wastelands,
reclamation of problem soils and integrated watershed development. The
first adds to physical space of land for cultivation whereas the second
improves the quality and capacity to yield more and, incidentally, a few
units to land surface; and the third improves productivity through quality
upgradation of land resources.

Water-resource development in the State depends upon utilization of

gro(Jnd water judiciously since there exists little hope and feasibility to
enhance the physical potential of increasing the irrigated area under canal
and tank systems. There is a ground water balance in the State to dig
1.88 lakh wells. Institutional improvements for better management and
optimal use of canal and tank command are necessary and that would
involve software options. Irrigation by wells are mostly under private control
and management. Investment is also private even if financing is done by
financing institutions.

Therefore, for the present analysis, wasteland and ground water

development are taken and this does assume that sympathetic changes in
the other parameters of agricultural development could be fashioned in
support of the two intervention strategies. The third strategy of reclamation
of problem soils will improve the productivity of soils and crops, and not
add significantly to physical supply of land. So it is therefore be discussed
separately.

Development of Wastelands

There are 14 lakh hectares of land identified as wastelands in the State.

The cost of development of wastelands is variously estimated. NABARD,
Chennai has estimated it to be Rs. 7000 per hectare. Agricultural officers
and well informed farmers place it around Rs. 10,000. It is estimated that
Rs. 7000, 10,000 and Rs. 12,000 per hectare will be the investment
required respectively for the period 2001, 2005 and 2010. The periods are
decided with reference to the available investible funds, supportive
personnel, and capacity of the departments to carry out the action plans.

Another important point for consideration is the end uses the

developed lands are likely to put in. This investment decisions on the

121
patlern of land use enhance the perspectives not only on development but
beyond the development of land uses. CARDS (1996) have assumed
certain proportions in the context of existing area under horticulture, fodder
crops and forests and the likely requirement of their products in future.
They have assumed the ratio of 4:4:2 for Region VI, 5:5:0 for Region VII,
and 2:3:5 for the other regions. For the present study, the ratio 4:4:2 is
assumed for Region VI and 4:4:2 is assumed for Region I through V.
Region VII is not included in the programming exercise because of its
dominant plantation economy and forest.

Investment for the development of wastelands is proposed in two

blocks of time of five years each ie., investment upto 2000, and upto 2005.
If one could start with the beginning of Ninth five year plan, first block will
end in 2003, and second with 2008 and third with 2013. The idea is that
development of a particular activity is designed for every five-year block of
time. They are dated fa;' sake of convenience. The incremental area is, for
instance, zero as in the existing area and the terminal year and the total
reclaimed area limit wastelands available. It is proposed to develop the
waste lands of 14 lakh hectares in two five-year periods the developed
land is allocated as : horticulture, (20 per cent). fodder crops (30 per cent)
and forests (50 per cent). For each activity, the allocation is for the two
block of periods. This allocation is ensured in the optimal solution by
putting a lower bound for the utilization of the developed land.

Development of Groundwater

The irrigation potential for growth in NIA in the State lies in the utilization
of groundwater resources. As noted earlier under the water resources, the
feasibility of increasing the canal and tank commands is extremely limited
and the feasibility of sinking around 12 lakh wells exists in the State and
may require RS.6000 crores at Rs. 50,000 per well on the average. This
has to be mobilized from private savings and institutional finance. The
investment is proposed over three blocks of period ending in years 2000,
2005 and 2010. It is estimated that a well may cover two hectares on an
average and the total area to be benefited would be of the order of about
24 lakh hectares. Approximately, one third of the potential is used during
each of the three ending up with 35 lakh hectares irrigated by groundwater
sources.

The seasonal distribution of irrigation sources could not be done,

eventhough annual estimates are available, because farmers could resort to
conjuctive use of water from different resources depending the crop
seasons and the water requirements. Irrigation availability is divided by
months of their uses and a two-month period has been issued as IRRJJ

122
for irrigation during June-July, IRRAS for irrigation during August-September
and so on. Further, sources such as canal and water (C + W) are
available for the first two periods, particularly after North east monsoon. The
last two periods witness the drying up of canals and tanks and the only
source of irrigation is wells. Thus, the availability of Irrigation is specified for
the period ending 2000,2005 and 2010 the difference between them being
the incremental area added as the result of ground water development and
use. Periods are A - Existing Plan, B - Optimum Plan 2000, C - Optimum
Plan 2005 and 0 - Optimum Plan 2010.

III) Crop Allocation

In sum, there are two resources and three time periods or

development status/situations specified for programming. Using the linear
programming model with variable resources, optimal allocation of resources
among the competing crops is determined. The distribution)' of investments is
spread over three block of periods and such decisions are captured in the.
:--resent scheme of comparative static analysis. The optimal plans derived
frol n such an exercise form the base and development strategies are drawn
along with action plans.

The steps involved are:

* Compare the optimal plan of the region with and without investments.

* The changes in crop areas indicate different points in growth locus.

* Identify complementary inputs to achieve the warranted output for the

State as whole and apportion the requirement regionwise for
decentralized decisions on action plans.

* Identify supportive infrastructure and policy instruments.

Interact with the decision makers and sensitize the plans to meet the
demand of them.

State plans are discussed below.

The State data are the regional aggregation and a comprehensive

view of the four points of agricultural development would help in formulating
the policy framework, its components, instruments and strategies. To be
sure, the situation A,B,C and D are the stages of development that depict
the changed resource pattern and crop pattern or crop-mix determined by
such changes. It describes the time path and the years 2000, 2005 and

123
2010 are marked and resource changes calibrated accordingly. The results
are furnished in Table 55.

Table 55 : Optimum Plan for Crop Allocation, Tamil Nadu

(Area in lakh hectares)
51. Crops Situation Changes over the
No. Existing Plan
A B C 0 BfA BfA OfA
1. Rice 18.48 21.18 21.92 22.32 1.14 1.18 1.21

2. Cholam 5.57 4.11 2.97 2.32 0.73 0.53 0.42

3. Cumbu 2.70 2.66 3.51 3.43 0.98 1.30 1.27

4. Aagi 1.07 1.36 3.86 1.37 1.27 3.60 1.28

5. Maize. 0.19 1.04 0.58 0.87 5.47 3.05 4.57

6. Blackgram. 3.34 2.87 3.35 3.35 0.85 1.00 1.02

7. Aedgram 1.54 1.74 1.74 1.80 1.12 1.12 1.13

8. Greengram 0.16 0.19 0.23 0.23 1.18 1.43 1.44

9. Pulses 4.72 4.96 5.17 5.27 1.05 1.09 1.12

10. Groundnut 2084 21.37 21.56 21.50 1.02 1.03 1.03

11. Sugarcane 2.97 3.58 3.80 404 1.20 1.27 1.36

12. Cotton 2.31 2.15 2.89 3.15 0.93 1.25 1.36

13. Vegetables 2.33 3.21 3.74 4.12 1.37 1.60 1.77

14. Tapioca 0.35 0.37 0.39 0.41 1.05 1.11 1.17

15. Fruits 2.57 2.98 3.22 3.31 1.15 1.25 1.29

16. Horticulture - 6.12 8.59 - 2.78 3.90 -

17. Forests - 2.01 2.27 3.54 - 1.13 1.76

18. Fodder - 0.54 1.15 2.18 - 2.13 4.04

19. GSA 69.14 78.54 88.46 91.80 1.13 1.27 1.33

20. Income (As. in crores) 4122 5166 5978 6469 1.25 1.45 1.58

21. Income (As. in hal 5962 6577 7076 1.10 1.13 1 19 -

22. Employment (Mandays in lakhs) 10870 12548 13432 14570 1.15 1.24 1.34

* Rice area under the existing Plan (A) is 18.48 lakh hectares which
increased to 22.32 lakh hectares, an increase of 21 per cent over the
period.

124
* Cholam, among millets, has shown declining share by 58 per cent
whereas cumbu and ragi have increased their share by 21 and 28 per
cent respectively. Maize shows large potential.

* Pulses area has increased by 12 per cent whereas blackgram area

gone up by only three per cent, redgram 13 per cent and greengram
by 44 per cent. The overall trend in pulses seems to go for larger
output and this could be achieved by irrrproving their productivity.

* Among the food crops, the area under rice, millets and pulses has
gone up from 37.77 lakh hectares to 40.96 lakh hectares at the
terminal year, an 8 per cent increase. Their share in GSA has,
however, declined from 54.6 per cent to 44.6 per cent because of
additional area has been allotted to high value crops such as fruits and
vegetables which together share 13.3 per cent.

* Groundnut area has increased by 66 thousand hectares, with a modest

change of 3 per cent.

* Sugarcane has improved its coverage by 36 per cent and cotton has a
similar gain.

* Vegetables and fruits have improved its area by 77 and 29 per cent,
respectively. The other crops of arid horticulture, agroforestry and forage
have been brought in larger changes i.e. 290.76 and 304 per cent and
their products would be in great demand because of nutrition and
income-wealth effects.

GSA in the Plans has increased by 33 per cent. The crop income is
Rs. 4122 crores in Situation A and has increased, at 1994/95 prices, to
Rs. 6496 crores in situation D an increase by 58 per cent. The income
per hectare of GSA has also increased during th8 period from Rs. 5962
to Rs. 7076 i.e. by 20 per cent.

* The employment increased by 34 per cent over the period. Collecting

the results of the analysis and putting them in a table one could draw
a broad base for policy formulation. The results are summarize in Table
56.

The table presents four blocks of information with respect to the crops
included~ Ten crops are included, and crops like cotton, fruits and
vegetables, agroforests and fodder crops are discussed separately. These
blocks are: Estimated product requirements, Projected production, Projected
area, and Programe Derived Optimum area~

125
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126
 The requirement of farm products are estimated on the basis of leMR
recommendation on dietary requirements and on the estimated porulation'
as indicated earlier in the discussions. The requirements of sugar and fruits
tor industrial use have not been considered here. Subject to limitations of
projections about economic and demographic parameters, it has been
assumed that the requirements could at best be fair surrogates of demand
parameters. Things get complicated when one uses the same units of
requirement over the years 2000, 2005 and 2010 as tastes and
preferences currently enmeshed in consumption bundles might change over
time. What does matter is not the numerals of years which stand for stage/
situation of development. Dates are also relevant, however, if one could
take investment planning and resource development. It is also assumed that
inter-temporal account of relative changes across the regions would not be
so divergent and distortive.
I

The assumed populations are 60.50, 63.50 and 66.90 millions for the
years 2000, 2005 and 2010, respectively. It seems very reasonable with the
experience of population policy and performance in the State.

The projected productions are arrived by using the long-term (1950/51

to 1992/93) rate of growth in area production and productivity of the
included crops. The long term rates of growth assume that the technology
of past is likely to continue and resource base could remain most probably
invariant. It is perceived that the compound growth rate would capture most
of the significant changes in technology and further, changes in technology
are brought into production which is considered a product of yield and
area, their interaction being random.

Projected Area is also estimated using the long run rates of growth in
area under the included crops. The optimum plans are used to derive the
pfojected area and there seems approximately close values of crop area
between the two estimates. Hence, it has been assumed that crop area of
the optimum plans could serve as the best indicators of resource
extensions. Using the estimated production requirements and the optimal
plans of crop allocation, the warranted rates of crop productivity could be
determined which in turn indicate the supportive decisions on agricultural
development necessary to achieve sustainable development.

Some of the observations on the crop trends are summarised in

Table 57.

Production of rice has been larger than the requirement in all the
three situations but millets are short in supply, as the past trends have
been negative in area though productivity has been marginally positive.

127
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128
Maize turns out to be surplus in the third period. Overall, food grains
production has been in surplus in all these three years but due to shortage
in pulses production food production remains deficient for the first two
periods but turns out to be surplus in 2010. Sugar and oils ,He in surplus
in the State. Vegetables production is short by 27 per cent and fruits
appear to be surplus.

The gap between the requirements and, separately the projected and
optimal supplies is analyzed in terms of yield gap. The results are
summarized as below:

The column (A/C) ex~resses the ratio between Hie estimated

requirement to the projected area which indicates the prospective yield. The
sub-columns A,B,C are related to the years 2000, 2008, and 2010,
respeotively. Column (AID) gives the ratio of the requirements to the
supplies of the optimum plans and this gap is defined as normative yield
that closes the differences between the requirements and the optimal
(output) supply derived out of the optimal plans. Column (B/C) gives the
ratio between the projected production and the projected area which is the
projected yield; and column (8/0) expresses the ratio of the projected
production to the normative area. The last two columns relate the first two
columns by a ratio of the projected that bridges the gap between the
requirement and supplies.

If CID ratio is or approaches to unity, the gap seems negligible, when

it is more than unity the gap needs to be filled by area adjustments
whereas it is less than unity, the source of adjustment becomes yield
increasing parameters. It may be noted that area adjustments could be
based on yield differentials and they are also rel8ted to yield parameters,
though indirectly. Accordingly, yield increaSing strategies are directly relevant
for crops such as cholam, ragi, pulses food, ~md sugarcane (2000); and
indirectly for cumbu, rice total food grains, oils and sugarcane.

129
 CHAPTER VII
POLICY INSTRUMENTS AND PROGRAMMES

The National Development Council (NDC) has recently approved the

Approach Paper on Ninth Five Year Plan submitted by Planning
Commission. The priorities include agricultural and rural development and
infrastructure develonment as means to mitigate rural poverty and
unemployment, and to provide minimum basic amenities of life to people.
The mandate is clear and the emphasis is on agriculture and rural
development. In the discussion of problems and issues of agricultural
development in Tamil Nadu, the emerging scenarios are: first, land
resources are extremely limited even with the addition of 14 lakh hectares
of land resources as developed waste lands. The scope for further
extension has been practically nil; second, with stalemate in inter-state and
inter-basin transfer of water resources for surface flows and with the
addition of 20 lakh hectares under irrigation by wells, the net irrigated area
has increased by 86 percent which would seem the upper limit upto which
irrigation could be developed in the State. The emerging scenarios are
presented in Table 58.

Table 58 The Emerging Scenarios

-L-~
Sl. Indicators c 0 Growth Relatives
No. rate (O/A)
A f---
1. Population (in millions) 55.43 59.68 62.68 65.79 1.5 1.187
-- -_-'_-- ------_.
2. NSA (in lakh hectares) 58.14 62.97 72.60 72.60 1.5 1.249
._- ._- ---
3. NIA 27.63 35.36 43.25 51.37 4.2 1.859
f--
4. Cropping intensity (per (..ent) 121 127 132 136 135 1.116
~---

5. Crop income 4122 5166 5978 6469 3.1 1.569

- ~-

6. Employment 107.52 125.47 134.32 145.70 2.1 .1.355

One could note that population will grow at modest rate of growth of
1.2 per cent to 66 million by the end of plan horizon (D). NSA and NIA
would be at their upper bounds of 72.6 lakh hectares and 51.4 lakh
hectares respectively. Cropping intensity will be 1.53 per cent, and crop
income has increased at 3.1 per cent a year. Employment could be
increased at 2.1 per cent a year. The 3.1 per cent growth across the
regions of the state with the assumed crop productivity and prices would
imply improvements in crop productivity of the regions and its regional and
districts variations have been analysed in details. The message is that
productivity gains could be achieved through technology including its
transfer, and institutional backup which facilitates the transfer besides
ensuring access to information, input finance and markets, by all classes of

130
farmers - small and large, rich and poor resource farmers alike. Thus, for
development of agriculture in Tamil Nadu, the main focus will be building
technological basis and strengthening of institutional supporb, in short,
'Technology and Institution.'

The thrusts of agricultural development and policy instruments are

presented in Table in an integrated mode. Emanating from the process of
integration designed a set of action plans are proposed as recom-
mendations for consideration by all folks concerned with the development of
agriculture in Tamil Nadu.

7.1 Development Perceptions

A sub sample of 160 borrower farmers has been taken lip to scan
the, perspectives on development issues and policy instruments. They are
summarized below.

Apart from financing agriculture, availability of inputs and services and

the expectations could influence the development process. Perception could
also vary with the success in farming which again depends upon
productivity_ It would seem very useful in identifying policy instruments to
ascertain the opinions of borrower farmer on the determinants of
development. The respondent has been asked to identify whether he is a
high productive farmer or low productive farmer or average farmer in
between. It is his assessment of productivity of his farm that matters and
the three groups of farmers have been classified as low, average and high
productivity farmers. The points on which their assessment are sought are,
availability of inputs and services, markets, access to markets factor and
product, prices, sources of information, risks and decisions on marketing;
seasonal and market risks; awareness of liberalization, organization required
and components of 'safety net'. The results have been normalized into
ratios to make them comparable. The analysis is presented in five tables
spread over as the problems/issues are discussed.

The availability of inputs such as seeds, fertilizers and chemicals, and

of services from development departments, particularly DOA, has been
assessed. The results are given in Table 59.

It could be seen that inputs are available to 54.5 per cent of low
productivity farmers whereas around two-thirds of average productivity
farmers and almost 94 percent of high productivity of farmers have
expressed little difficulties in buying inputs for production. Over all, 71 per
cent are able to access modern inputs. These results broadly justify their
own assessment of farm productivity.

131
 Table 59 Availability of Agricultural Inputs and Services in
Tamil Nadu (1995/96)
(in per cent)

_!_ro_d_uc_t_iv_ity_G_ro_u_p_+-______ru~_ avall~~T___ Services Provided __

-1- -~:~ --I -- ~-;--o 4:S0-~

Sw
-Lo-w------h:5 ----+----2-0-0

Average 67.6 I -- -~~n--r ----3~-5 349 - ---~;-6~- --~

- -;:~
t - - - - - - - t - - - - - - - - - I - - ------ -----~----+__----t____-----l

~~~:I 1- ;t; - - - ::: ::: :~.:

NB : Y-Yes, N-No, SW-Somewhat satisfied, F-Fully Satisfied, NS - Not satisfied

As regards technical/professional services and advice from development

departments in agriculture, there are three points of reference: satisfied with
service fully, somewhat satisfied, and not satisfied. Around 60 per cent of
low productivity farmers are satisfied, including some what satisfied; 74 per
cent of average and high productivity farmers are satisfied with the
technical services made available to them. This has reflected in their
respective variations in productivity. Markets and marketing are examined in
the context of accessibility to product and factor markets, the latter is
concernAd with labour and other services.

Table 60 : Markets and Marketing of Farm Products in Tamil Nadu

(1995/96) Access to Market
(In per cent)

Productivity By Sources DlspOS:11 Acess Factor market

,-~;:__=- =;;, l~~: ./ },-= ~8 --'3\- _~_-R_--+_--~-OO-LO-_--+_~_- ~- __

Average 197 70.9 94 160 80.0 4.0 23.5 67.7 8.8

- ----.- -------. - ------- -~--f___--+__--+----+-----l

High 57.1 28.0 14.3 47.6 28.6 28.8 80.0 15.0 5.0
- -- ---- -- - - - - - ----_.. -- -----
Total 29.7 60.6 9.7 20.7 55.4 23.9 42.9 50.0 7.1

NB D-Dlrect, MfT- MiddiernenfTrat!crs, C-C(Jopcratives, R-ReacJily, L-Limitcd, N-Na access.

Some interesting results could be seen that low productivity farmers

(71 per cent) have little access to product markets and 57 per cent of
them sell their products through middlemen/traders involving commission
and/or tie-up sales; and 39 per cent of them have direct selling in markets.
And in factor market, they have reported to have limited access.
Surpassingly, average productivity farrners have access to market readily (16

132
per cent} and limited access (80 per cent) which facilitate direct sale (20
per cent) and middlemen/traders (71 per cent)

High productivity farmers have largely resorted to direct sales (57 per
cent) and through intermediaries (29 per cent) as they have ready access
to product market (48 per cent). That 29 per cent of this class of farmers
have no access to product market seems odd with the highest share of
direct sales. However, it could explain the trade (29 per cent) through
traders.

In factor market, high productive farmers has larger share of ready

access (80 per cent), average productivity farmers ha'/e larger share (68
per cent) through middlemen and market intermediaries.

Table 61 : Agricultural Prices, Information and Risks,

Tamil Nadu (1995/96)

(in per cent)

Produ- Prices Price Information Price Risks

ctivity
Group y N CW LM FF MC a CN IN pv

Low 8.7 26.1 64.2 45.5 40.9 - 13.6 500 - 50.0

Average 18.0 36.9 45.1 40.8 46.4 6.4 6.4 71 1 8.9 20.0
--_- ~

High 36.4 36.4 27.2 53.1 15.6 156 65.5 31.0 3.5 -

Total 20.4 35.3 44.3 43.9 39.6 7.3 9.2 68.2 13.2 186
---
NB : Y-Wait, N-Don't wait, CW-Can not wait, LM - Local market. FF-Fellow farmers,
MC - Market committee/Cooperative, a-other sources. CN-Contracting, IN-Inventorying,
PV - Processing.

The relevance of waiting for good acceptable prices has been

examined. Then what are the sources of priC?e information and how does
he manage price risk are analysed. Around 91 per cent of low productivity
farmers sell immediately after harvests in local markets; and 65 per cent
have stated they could not wait implying distress sales. They manage price
variations and risk through contract selling with pre harvest tie-up either
through input transactions or borrowing. Similar trends could be noted in
the case of average productivity farmers.

However, high productivity farmers seem to have greater leverage in

selling decisions by inventory adjustment and contract sales. Low and
average productive farmers could store and process, if need be, whereas
high productivity farmers have small share (3.5 per cent) in risk
management. One strange thing is that high productive farmers could wait
and also could not wait, in equal proportion (36 per cent) which shows

133
some certainty plausibly because of market prices and market behaviour
and if one could combine 'don't wait' and 'cant' wait' to mean, it would
cover nearly two-thirds of high produce without waiting for good price and
they depend on market and fellow farmers for price information. Nearly two-
thirds of them had arranged for contract selling and very few (13 per cent)
of them carry the stocks over a period anticipating better market conditions
and good prices.

How farmers manage risks in agriculture, particularly of seasons, and

crop pest and disease? Among the options, crop adjustments (46 per cent),
crop insurance (8 per cent) and just ignore as nothing could be done to
hedge against risks (46 per cent) are reported. The question has been
about their intentions.

Table 62 : Patterns of Risk Management in Agriculture,

Tamil Nadu (1995/96)
(in per cent)

Productivity Risks
Group
Seasons Pest & Diseases
INS CC IG INS IPM CA

Low 4.5 50.0 45.5 4.3 4.3 91.4

Average 9.3 40.7 50.0 0.9 9.3 89.7

High 6.1 60.6 39.3 - 18.2 81.8

Total 8.0 46.0 1.2 10.4 88.3 -

NB : INS-insurance, CC-Crop changes, IG-Ignore, IPM-Integrate Pest & Disease Management,
CR-Curative treatment

Low productivity farmers would alter cropping pattern against seasonal

risks (50 per cent) which are mainly due to delayed rains and, to a small
extent, excess rains, and 46 per cent of them have expressed to stay put
with the risks as they feel nothing could be done otherwise. Against risks
due to pests and diseases, they would treat them with chemicals (91 per
cent) as and when they are noticed and they do adopt a little by way of
IPM or insurance. Similar trend could be noted in medium and high
productivity farmers in managing the incidence of pests and diseases,
except the latter who would also take up IPM. Decision to ignore seasonal
risks seems relatively has for high productivity farmers,

Farmers have been asked about their understanding of New Economic

Policy and its components such as liberalization and globalization in a
preliminary way. Their knowledge about the policy of liberalization, the

134
options it has generated are sketchy and less perspective. The process has
been explained. A set of questions on what should be done to protect their
interests and on what are the components of safety net they would
consider important have been raised with explanation of the implications.
The answers seem to border speculation as they have no experience as
they see them.

Among those who have agreed to the proposition that farmers may
have to organise themselves to gain from the NEP. 28 per cent of them
would like to have farmer group organization to protect their interests and
19 per cent consider cooperatives could meet their requirements; and others
have expressed contractual arrangements with traders / market
intermediaries to take care of their interests.

Among the groups, low p,'oductivity farmers have considered

cooperation and contractuals with equal weights (33 per cent), followed by
group organisation (24 per cent). The average productivity farmers have
greater reliance on farming groups whereas the high productivity farmers
prefer arrangements with business, followed by farming groups.

Nearly 88 per cent have felt that safety net should be formulated to
protect their interest and market regulation, not control, would be necessary;
and prices and income would need to be stabilized around some
guaranteed levels so that they would not be exposed to market vagaries.
Low productivity farmers would prefer safety net with full protection of their
income through guaranteeing remunerative prices. Average productivity
farmers have also expressed their concern with price and income security
and with free market conditions which could be kept under some kind of
operational regulations. High productivity farmers have relatively less concern
with the need for safety net, less enthusiastic about market controls and
income guarantees. They would however prefer price supports in markets.

7.2 Policy Perspectives

The table below summarizes the problems and issues of development

which are structured based on a paradigm that proposes an integration of
resources, technology and institutions for agricultural growth and
development in Tamil Nadu.

135
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136
 Projectization may involve time scheduling and investment planning

The policy instruments are listed with brief mention of implications. It

must be mentioned that the list gives out suggestions but does not discuss
here the interactive processes that have taken place in farms, with
profes3ional workers and development administrators across the State, as
more details have already been provided while discussing the problems
earlier. Specific recommendations follow:

1. Wasteland Development

The estimated area of 14.5 lakh hectares of wastelands is proposed

to be developed in two phases of five year each ending in 2001 and
2005. This area is distributed over the seven agro-climatic regions and
suftable regional plans have to be drawn.

a) The cost of development of wasteland is As.433.8 crores for 4.82 lakh

hectares at RS.9000/hectares in I phase and Rs.964.4 crores for 9.64
lakh hectares at RS.1 DODO/hectares in phase II. The total cost would
be Rs.1398.2 crares.

b) The benefits are :

i) Capital (land resources) value appreciation Rs.1678 crores, by 20

per cent over the investment

ii) Incremental annual net crop income at RS.2639 crores.

(Horticulture Rs. 580 + Fodder Rs. 435 + Agroforestry Rs. 1624)

iii) Additional annual employment of 2624 lakh mandays (Hort 3047

+ Fodder 580 + Agroforestry 1740) and

iv) Benefit-cost ratios indicate economic viability.

c) Investment needs to be mobilized in a number of innovative strategies.

i) Government can directly finance 50 per cent of the capital cost,

the balance being shared by financial agencies, corporate sector
and individuals.

_ ii) Land development cooperatives can support through issue of

special debentures for wasteland development which can be
supported also by NABARD.

137
 iii) State Government may issue Development Bonds for a period of
10 to 15 years to provide funds for wasteland development.
Any combination of these can be decided.

iv) Cost could be recovered in ten years from the owner of the
developed lands with provision for concession for early
repayment.

v) A Wasteland Development Authority may be formed for a period

of 15 years to administer the programme. Fifty per cent of the
membership may go to user groups (1/2) and members of PRls
(1/3) and the rest is (1/6) shared equally by administrators,
technical personnel, NABARD, Bankers and financial agencies.
The cost of the running the Authority may be borne by the State
and NABARD for the first five years and by the Authority itself
;::>r the rest of period.

d) Wastelands to be identified along with the beneficiaries with the help

of PRls and NGOs and a clear statement of title to land, financial
and / or labour contributions, their specified commitment to the
Authority on crops to be raised and repayment schedule, and the
condition that the developed lands cannot be disposed without the
permission from the Authority and the related conditions need clear
and transparent statement and agreement.

e) Afforestation, agro-forestry, sylvipastures and horticulture are the major

activities programmed for the utilization of the added lands which
therefore should be included in the allocation plan.

II. Problem Soils Development

The problem soils, affected with salinity or alkalinity or acidity, occur m~inly
in 4.1 lakh hectares distributed mainly in Regions II, III, IV, and V. It is
proposed to reclaim these soils and improve them qualitatively so that crop
productivity could be enhanced. The various estimates of CARDS, TN AU in
their development document (CARDS, 1994) are generally adopted with
modification wherever necessary.

a) (i) Investment for reclamation of 4.11 lakh hectares at the cost of

RS.10,960 per hectare would be RS.450.00 crores.
(ii) Increased annual returns from an additional yield of 4.49 lakh
tonnes at Rs. 4000 I tonne, after three years of reclamation of
soils would be Rs. 180.00 crores.

138
 b) Investment is by individual and specially, small and marginal
farmers who have little incentive or motivation to undertake
reclamation work. State could provide subsidies for purchase of
chemicals and banks could finance trrough loans for medium term.

c) Operationally, compact areas have to be delineated and

arrangements for supply of gypsum / lime to farmers at the
nearest supply points is necessary, and reclamation process has to
be undertaken by farmers under the direct guidance of DOA /
DAE on dose and drainage operations.

d) Field demonstrations on reclamation methods and on their impact

have to be organized by DOA, involving NGOs and farm leaders.
,
III. Soil Conservation

As a part of dryland development, soil conservation is necessary for

larl'::!s of undulating terrain, wind eroded tracts and exposed surfaces. The
conventional techniques of contour bunding and bund crops could be
complementary with methods of broad bed and furrows, soil builders, and
crop geography. There is no estimate at present of eroded soils and the
relevant technologies for conservation. This may be taken up by organizing
systematic surveys, along with watershed programmes.

IV. Land Reforms

After five decades of experimentation with land institutions it would

seem necessary to review the progress of land / agrarian reforms. Since
the abolition of intermediaries has been completed in Tamil Nadu, the
current issues are concerned about not only the old issues of tenancy such
as fair rent and security but more about new strategies such as contract
farming, bargained / negotiated agreements and the relevance of ceiling on
horticultural, farm forestry and plantation lands. State Planning Commission
has already launched studies on tenancy in temple lands and so on. This
could be used to formulate approaches for the suggested study.

V. Irrigation Development
The State has two sets of problems on irrigation. First, the surface
irrigation with canal and tanks as sources of irrigation. The problem is not
much of e>Etending surface irrigation as its scope is extremely limited; but,
on the other hand, management of available surface water efficiently is the
major concern. Efficiency is achievable only when certain conditions, for
which political will is essential, are set and realised. Second, the ground

139
water potential still remains partly used and its development looms large.
Policy issues are identified with the above context and listed below.

* Since the State will be facing acute problems of surface irrigation

in the decades to come, modernization of the major irrigation
systems is necessary. With limited supplies, the optimization of the
use of available water becomes a necessity as in the Cauvery
delta, for example. A master plan for irrigation and drainage
accompanied by physical and spatial bunds realignment, building
irrigation and drainage structures needs to be prepared taking into
the design and the experience of the Nile System in Egypt, and
as in Thailand wherein massive investment was pumped in by
World Bank, besides the involvement of European countries and
Japan. The master plan needs to be futuristic, instead of limiting to
solve only immediate problems or contingent operations.

Rotational system of irrigation may be extended to all irrigation

commands in the State. Necessary physical structures such as
sluices and devices for measuring the flow in distributories. lining
of channels and the like should be built with provisions for
protecting these structures with stiff penalty against the offenders.

* On farm development (OFD) work could be introduced in all river

commands and this should be jointly carried out by the irrigators
and / or their associations, DAE and NGOs. Maintenance and
upkeep need to be provided.

* Rationalization of water rates is best achieved if metering of water

is possible. This should be in the agenda of irrigation development
and the execution would be phased over five years. Until such
time, measuring of water flow at the distributory level could be
arranged. This would enable monitoring of flow of water and its
use. Mid-term correction is feasible. The current water rates should
cover at least one per cent of capital cost plus the variable
(running) cost of operation and management.
* In the State, around 75 per cent of tanks with a total command of
5.81 lakh hectares need repair and structural improvements. The
investment may be around Rs.697 crores which works out Rs.2.40
lakh per tank or Rs.12,000 per hectare of gross irrigated area.
There will be additional one-time employment of 291 lakh mandays
and annual additional employment of 116 lakh mandays.

* Investment on capital and construction materials could be partly (50

140
 per cent) in public sector and the labour components have to be
borne by the beneficiary farmers. Banks can finance may cover
part of investments on medium term basis.

* The entire cost of modernization may be recovered in ten annual

instalments from the beneficiaries and Tank Administrative
Committee could organize recoveries and manage operations.

* Modernization of tank system in the State has a focus on desilting

of tanks and strengthening their bunds and cleaning of field
channels.

* Removing completely unauthorized occupation or of foreshores of

tanks in order to improve their capacity to hold and release water
as scheduled has to be taken up with full force and commitment.

* Scheduling water deliveries with close participation by users/

irrigators and implementing them by a Tank Advisory Committee, is
helped by irrigation and agricultural officials, and NGOs.

* It is estimated that there exists in the State a potential of digging

12 lakh additional wells to cover 24 lakh hectares of lands under
wells irrigation. With an average cost of sinking wells being
Rs.50,OOO per well with full complements of water lift appliances,
the size of investment requires a huge sum of Rs.5,935 crores,
b:.Jt that seems inevitable since it is the only source of irrigation
the State can do with. An additional complexity is that it should be
done in private farms by individuals who cannot have access to
such a huge sum.

* The investment will generate an additional output of 34.26 lakh

tonnes of rice equivalents valued at RS.137 crores annually, in
addition to annual increase in employment by 2137 lakh mandays.

* The ground water balance has not been uniform across the State,
nearly 80 per cent of additional wells could be sunk in Region II,
III and V and therefore efforts need to be concentrated in the
regions for locating sites and building necessary infrastructures.
Density of wells should be rationalized in optimal locations.

* It is considered very necessary that capital flows into this sector

which is canalized efficiently through financial institutions. Banks
under guidance of NABARD should come in large measures.

141
* The State may consider a "mission mode" like the Oilseed Mission
to formulate and operate specific development design for mobilizing
investment for sinking wells. Multi agency collaboration between
departments of groundwater, agriculture, electricity and the like is
necessary. This may be 'well mission' for utilizing ground water to
the maximum extent feasible.

Ground water is a common property and it needs to be equitably

utilized. Small and marginal farmers should be empowered to have
access to water through common investment and innovative
management such as common group well users association for
group management of distribution, pricing and realization of
investment costs. Public outlays may supplement them

* Power rates for operating pumpsets are of crucial significance and

pressure to withdraw the subsides for power used for irrigation can
not be avoided. Some basic rates which are minimum should be
determined and collected. The basic rates may be with respect to
cash/commercial and food crops reflecting the grazing capacity.

Micro irrigation techniques such as drip and sprinkler are

techniques which could increase the area irrigated per unit of water
and they need to be encouraged. The high cost of well water
could be spread over a larger area reducing unit cost. Again,
especially, small and marginal farmers who could build such
infrastructure by themselves as a group need support by the state. '

The weakest link in the irrigation system is the lack of strong

irrigation institutions, be it in canals, tanks or wells. Policywise, the
basic paradigm is that irrigation management down the main canal
should be decentralized.

* The hardware part of the irrigation system which include reservoir

and down stream structures should be with irrigation department,
leaving the software part of management compriSing of decision on
water distribution, maintenance of field channels down the
distributories, water pricing consistent with the overall policy,
collection and maintenance of the system should go with
association of irrigators or water areas.

A manual of management procedures with statutory back up may

have to be drafted to help the local association in management of
distributories. The draft irrigation bill needs to be enacted so that a
set of guidelines could follow.

142
VI. Watershed Development

There are 84 watersheds in operation in the State financially

supported by Central and State Governments. Experimentally, NGOs are
involved in developing a few watersheds. It is necessary to prepare in
integrated plan for each watershed jOintly by technicians, NGOs and
farmers. Based on fund flow, the implementation could be taken. It would
also be necessary that an independent organization is established for social
audit of the programmes as these programmes are resource based and
environment friendly and sustainable.

VII. Infrastructure

The issues of physical infrastructure pertaining to irrigation system

have been covered already. Infrastructure for marketing, and R&D will be
considered in what follows.

a) The New Economic Policy (NEP) attempts to be market friendly

and depend on the interplay of demand and supply in free market. This
kind of economic romanticism does not suit to the market structure, and
conduct in agriculture in India characterized by millions of producers and
sellers encountering a few powerful and manipulative traders. The present
arrangements for orderly marketing through regulated markets can continue
as an intervening institution in empowering farmer-sellers in market.

b) One would suggest a dynamiC personnel policy for these institutions

and only trained professional could be incharge of its management. The
entire staff of market committee should be fully trained in all aspects of
agricultural marketing and business, '!1anagement The training by deputation
where ever necessary could be completed in a phased manner within a
period of 10 years.

c) State Agricultural Marketing Board has a dynamic role to play in

activizing the regulated markets in the State and it would seem appropriate
that the Board is headed by a professional trained in modern methods of
business management and agri-business who have complete freedom to
decide on the marketing programmes operationally subject to the overall
policy frame work mandated.

The present proposition is that farmer makes decisions on allocation of

land among crops which sets out cropping pattern of his farm and required
inputs stJch as seed, fertilizer, chemical, labour and irrigation. The decisions
are essentially by individual farmers and what the state could offer is
information about technical skills, market opportunities and i'1stitutional
support.

143
VIII. Incentives

Furthermore, the state might set its goals as food security, self
sufficiency, maximum employment and sustainable farming. The state
provides incentives and siJbsidies to induce and motivate farmers for taking
individual decisions to opt for production of the warranted output and
employment. The details about the availability of incentives for various items
are given in Table 64.

One could note that the impact of the subsidies has been positive in
achieving growth in output and employment, and relatively reduce risks in
productivity and uncertainly income. The question of accessibility and
institutional roles remains to be the major concern of policy makers which
will be addressed later in this session. Then the issue could be related to
R&D in generating a stream of technologies, transferring them effectively to
farmers and their institutions. They are subsidized and promoted. Policy on
strengthening R&D will be discussed later. The focus of research and
transfer of technology needs to be based on the problems for the problem
solving. The order of presentation

i) Food security
ii) Employment
iii) Crop systems
iv) Subsidies
~) Infrastructure

i) Food security

* Food security has been considered as one of the major policy

instruments, even though the process of trade liberalization and free
flow food products could eliminate considerably the apprehension
about food availability and security. Imperfect market information,
unforeseen transport bottlenecks and lag in supply response
introduce uncertainties in food availability. There are three groups of
food components: first foodgrains which include rice, wheat, jowar
and other millets : and second, pulses which are the source of
food proteins and which include grams and beans, and third oils
which provide food fat.

.. Rice is the major cereal in the State which is sown in 21.2 Jakhs
hectares to produce 66 lakh tonnes with yield of 3.1 tonnes per
hectare. The policy issue is, how much an increase in rice yields is
warranted in the context of rising fertilizer costs and concerned
about substainability and rice prices. One can also note the

144
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146
 average yield of rice are approximately on par wit the warranted
yields for the State. In 24 per cent of the rice area the yield is
less than three tonnes per hectare. It would therefore be desirable
to set the target rice yield of 3.5 tonnes per hectare, against the
potential of 4.2 tonnes per hectare (CARDS, 1995), and the yield in
the regions should be brought to that level. The increase is about
12 per cent over the present state average. At this level, for
production of 66 lakhs tonnes, the area required will be less by 2.3
lakhs hectares than the present area.

* Rice yields could be increased through an integrated nutrition

management system of fertilizers, bio-fertilizers, organic/green
manures; water management with management complements of
nursery and plant population. Soil fertility in the low and medium
yield districts will improve with the addition of organic manures, and
cultural practices. In the medium and high yield districts, cost
reducing techniques along with reduction in the use of chemicals
and other environment friendly methods could be increasingly
adopted. There are trade-ofts in this process of factor-elements
substitution and one would look for practices that would lead to
sustainable agriculture.

* Millets are the complements of foodgrains for food security and their
use will shift from human consumption to livestock feed in the
course of time when income effects become stronger.

* Production of pulses has been lagging far behind the requirements.

The area under pulses, except in rainfed regions, has been linked
with cereal crops. The breakthrough In production should come by
productivity gains for which other states have advantage. For the
present, deficits in output could be' met with imports from other
northern states.

II) Crop Systems

* The crop sub-systems are food crops, comme,rcial I industry-based

crops, horticultural and plantation crops, fodder crops and forests.
The decisions on the crop systems are individua!istic .. and yet one
would consider the information on relative prices, profitability and
sustainability is crucial for guidance.
-
.. Agro-climatic regional planning which is a new approach being tried
by National Planning Commission is resource-based, technology
oriented, decentralized planning. For each of seven agro-climatic

147
 regions of the State, optimum plans for resource allocation for
maximizing income and employment could be drawn. This basic
plan could be sensitized to resource and price variations and for
different levels of technology and a set of optimum plans could be
determined along with income and employment implications.
Extension agencies may use these plans to meet and discuss with
groups of farmers for effective transfer of technologies and for
optimal allocation of resources for maximum income. Rural Internet
is proposed by the Government and this would facilitate to know
and evaluate by extension agencies and farmers.

.. The horticultural component of the plans warrant special attention

because of quantum jump in demand for horticultural products and
the need for supply stability. There needs comprehensive information
on markets, trade opportunities, technological linkages, infrastructure
for production, processing and packaging. An organization such as
Horticultural Product Board / Council would help to assemble
packages of information on trade, direction and competition, import
of technology and buyLJack arrangements and all, and make them
available for farmers and horticultural firms. This will be a nodal
organization for production and trade.

.. The trade opportunities and production needs are best utilized if

regional centres of production of specified and specialised crops are
identified and developed in the model of industrial estates.
Investment could be made by cooperatives/state/corporate bodies
and allotted with specific schedule of recovery. Each unit is fully
developed under an administrative unit for which producers,
processor, financial institutions and state would be members.

.. Production of fruits and vegetables, spices and condiments, and

flowers tor domestic market can be a part of normative plans tor
crop system development.

.. Plantation crops are in different setting as they are linked with

world trade and tl-]ey face severe competition and recently, declining
share of world trade. Quality upgradation and brand improvements
to secure premium prices, and cost reduction through integrated use
of fertilizers, rational use of chemicals and organics could sharpen
their competitive edge. The commodity boards have clear roles to
play in this regard.

.. Technologies of building polygreen houses for controlled production,

micro-irrigation technique and tissue culture and biotechnology are in

148
 continuous flux of changes all over the world and they have to be
upgraded continuously so as to be in race in the market.

* A collaborative programme to start a network of quality nurseries

under a joint project of public (Department of Horticulture and
Plantation Crops) and private (Corporate sector) seems important for
the entire horticultural programmes. This jOint venture ensures
integration of technology, management and investment.

* New institutional arrangements between farmers, particularly of small

and marginal farms, anci corporate agencies could be worked on
the lines of contract farming where ownerShip is not disturbed but
quality and regularity in supply could be assured. Finance and
management skills are added.

* The state is deficient in fodder supply by 35 million tonnes annually

and an additional area of 1.78 lakh hectares would be required. In
programming, provision is made out of the developed wastelands
with lower bound.

The solution indicates the area under fodder as 0.54, 1.15 and 2.18
lakh hectares in the years 2000, 2005 and 2010, respectively. Fodder
production in large areas to meet the growing demand of livestock industry
has to be organized with the support of financial institutions. Irrigation and
fertilizer schedules could be worked out. Government may lease out
wastelands for fodder production and to build a fodder bank to meet
contingencies.

* Fodder from rice could be better used by treating it with urea and
other dry fodder of cholam and ragi could be enriched for quality
fodder.

* Agro-forestry has been developed to cover the wastelands outside

the traditional forest area with main thrust on production of fuel
wood, small timber and forage. The emphasis on agroforestry
projects including social and farm forestry may continue with greater
partiCipation by people, PRls and NGOs. The area of agroforestry
in the optimum solution has been 2.0, 2.3 and 3.5 lakh hectares
and the success of the programme depends much upon the
acceptance of people and the tree species recommended by the
Department of Forestry. This could be part of agro-climatic regional
plans.

149
iii) Subsidies

As discussed earlier, subsides are the major components of policy

package for the support of desirable changes for development. The types
of subsidies, development focus, instruments and impact are presented in
Table. For non-product specific and product specific subsidies. They are
related to agricultural production and distribution of inputs and resources.
The subsidized inputs are fertilizers, chemicals and seeds whereas the
subsidized resources, are irrigation, electricity and land development. Interest
subsidies are class specific and targeted on small and marginal farmers.
Implements are supportive adjuncts

* Subsidization of prices of fertilizers and chemicals is done as

compensation for maintaining food prices artificially lower than border
prices and once the market and trade are liberalized, the necessity
to subsidy will cease and therefore the subsidies could be
withdrawn as food prices are liberalized.

* Resource subsides have been discussed earlier with great details.

Irrigation system is not perfect in providing irrigation services to
farmers efficiently and until control structure are built to manage
water flows and metering of water is introduced, water rates cannot
be brought under comrnercial nexus. Nevertheless, the present rates
could be rationalized on the basis of crops grown keeping in mind
that the cost of operation and management should be covered by
the water rates.

* For effective control of water distribution, assessment and collection

of taxes and management. Irrigators Association could be sunrorted.
PRI President, NGOs and irrigation officials could be nominated for
guidance and advice.

* Subsidized distribution of drip and sprinkler irrigation equipments

could be limited to small and marginal farmers as and when they
are organized to operate horticultural projects. Polyhouses and other
control structures need subsidies and for this group farming could
be emphasized.

* Electricity is the prime mover for the modern agriculture which

consumes 27.2 per cent of total electricity produced in the State.
Agricultural consumers account for 14.4 per cent of total consumers.
Electricity is distributed free to all farmers in the State. Under Self
Financing Scheme, RS.25,000 is collected for electricity installation or
actual cost whichever is higher and also an agreement to pay

150
 Rs.150 per 'horse power' annually is also executed. It is for
consideration whether the rate could be fixed at Rs.150 per 'horse
power' to all the energized pump sets. This would avoid the free
power supply which has been justified by political commitment but
objected to by many financing agencies including World Bank.
There is objection from farmers that electricity board is least eHicient
and if their cost could be rationalized the rates could be
acceptable. There are thus two conditions: first, costing of electricity
should be rationalized and second, farm product prices should be
market driven and when they are satisfied, the subsidy on power
rates may be removed.

* Subsidies for tillers, tractors and other machinery would seem

redundant as the users are mostly high medium and large farmers.
Small and medium farmers could use custom services of these
machinery. Private units can trade and service the machinery.

Minikits are the instruments of popularizing new crop varieties,

modes of cultivation and reaching small and medium farmers. One
would like to examine the alternate forms of transfer of technology.
in the context of poor reach down of minikits to farmers.

The distribution could be rationalized by the State Government. The

basic concern is that farmers have alternatives and seek facilities for
marketing when traders become tough and dominating. They could also
consider market committees as farmer friendly.

iv) Infrastructure

* Market committees build communicqtion network with domestic and

world markets for prices, arrivals and disposals and also effective
audio-visual system to communicate market information to farmers.
With the support of effective storage facilities, distress sales could
be avoided to the benefit of farmers.

* Research and Development (R&D) are the other institutional

infrastructure which need complete orientation towards the needs of
developing agriculture. National Agricultural Research Project.
National Agricultural Extension Project, Tamil Nadu Agricultural
Development Project and Agricultural Human Resources
Development Projects are the major projects to strengthen research
and development in agriculture handled by Tamil Nadu Agricultural
University and DOA respectively. DOH PC, DOS and DAE are
organizationally partners with DOA. The focus of these projects has

151
 been as highly fractured and disjoint organizationally, as these
institutions are. However, developing dynamic agriculture requires
functionally integrated institutions.

* The State might consider the ways of integrating research and

development organically such that they could develop technology
packages for all classes and types of farmers. Research could
develop strong linkages with national and international research
institutes to keep abreast of development in research elsewhere.
The benefits drawn from such linkages flow to the development
agencies in extension wing. This is the concern of the state and
policy to make use of the potential seems overdue already. There
can be many issues we may address.

* First, related to professional upgradation of staff working in

development wing. Most of them have the first degree in Agriculture
or Horticulture or Agricultural Engineering, and a few of them have
master degree. It would seem necessary that, at a time, atleast 10
to 15 per cent of technical persons with first degree should be put
in training circuits for post graduate degrees, and advanced on-jOb
training suited to specific situations. The latter could be in
laboratories, and regional research stations. Likewise, scientists, 20
per cent at a time, could be placed in different institutions of DOA,
DOHPS, DAE and DOS in laboratories, training progrmmes such
as that of T A.NWA and at the directorates to gain access to and
information on not only farmers' problems but also on how these
problems are solved by development agencies and how research
could be of assistance to them. The related questions of pay and
placement could be sorted out by the government.

* Integration of R&D would achieve the objective of agricultural

development if grass root institutions are involved in planning,
implementing and monitoring of development process. This is
decentralization process and the grass root institutions are
panchayats which form the bedrock of growth and progress in rural
sector, initial teething problems of consumers and adjustment
notwithstanding. Unless these institutions could be successful only
when they could work through panchayats.

A multidisciplinary team of R&D for agriculture could be placed with

the District Planning Committee which can plan and organize agricultural
development projects. There could be a strong professional body built
around PRls for this purpose.

152
* It would be necessary to train PAl functionaries in major aspects of
agricultural planning and development such that their participation in
development process will be useful.

* The State government has decided and transferred the tasks of

keeping stocks of seeds, fertilizers, chemicals, small implements and
the like from DOA to private concerns and parastatals. This
provides unique opportunities to extension worker to specialize on
information building and transfer of technology exclusively. DOA and
TNAU could secure separate channel in Television for information
dissemination. Using latest computer techniques, audio-visual~ could
be developed covering specified activities for transmission.

qpecial. task charts could be drawn to meet the needs of small and
marginal farmers through personal contacts, groLlp discussions and
field demonstration to carry the technologies to farms. Medium and
large farmers have adequate access and motivation about
technology through visits with extension workers, mass media;
transformation modes and others. The approach needs to be
specific to the vulnerable groups in agriculture.

L.

153
 CHAPTER VIII
CONCLUSIONS

1. The discussions are over. One could note the diverse resource
complex of Tamil Nadu and its wide variations across the districts giving
rise to different crops and farming systems. The Northeast coastal (Region
II) gaining its importance in food production, the Central districts (Region II)
with diversified agriculture with the dominane of industrial crops, fruits and
vegetables, the Cauvery Delta (Region IV) stabilizing with rice under high
technology productivity regime, the Southeast and Southern regions
developing with crop and non-crop system with additional irrigation potential
through investment in tanks and groundwater. The Northern districts of
Salem and Dharmapuri (Region I) are drought - prone but with large
potential for fruits and vegetables. Kanyakumari with rice-plantation based
farming while the Nilgris have all plantations with cole vegetables.

2. Wastelands of 14 lakh hectares are being developed and added to

net sown area under a set of development interventions such as
watersheds of varying regions, land development and conservation. Around
four lakh hectares of lands lay scattered along the coastal belt and ill -
drained soils in the interior which could be treated with chemicals
supplemented with organic and green leaf manures and cultural practices.
And there are dry lands covering 55 per cent of net sown area which
could be developed by in situ moisture conservation, building percolation
ponds, check dams and weirs. But the critical input is a suitable farming
system supported by ground level technologies and organization, which has
to be developed, field tested by on-farm research, and introduced on
a massive programmed initiative. The potential components could
be agroforestry, silvipastures, fuel forestry and arid horticulture. Much has to
be done for developing action specific methods for rapid transfer and
adoption.

3. Water resources are extremely limited. Surface irrigation is pegged to

14.2 lakh hectares or 56 per cent of net irrigated area. Groundwater
sources have potential balance for 12 lakh additional wells in Regions II, III
and V and it would be possible to increase area by around 20-24 lakh
hectares which would increase the share of net irrigated area to net sown
area to 65 per cent, perhaps to an ultimate potential. This would call for
massive investment in private sector for sinking wells, in addition, not least
important, to large employment of labour mechanical and human. Most
importantly, it would need well coordinated efforts between departments/
agencies involved in locating and sinking wells, fitting with water lifts and
electricity connections, besides designing suitable crop schemes.

154
 4. Water use efficiency could be improved through new water
management techniques on farms, waste minimizing conveyance and
conservation methods at the system levels, conjunctive use of surface and
ground water resources and adoption of micro irrigation technology such as
drip and sprinkler systems could be popularized and supported by credit
and specifically targeted subsidies.

5. There have been downward trend in the area of major crops such as
rice, millets and oil seeds but production have shown upward trend
because of rising productivity. There are, however, differential in productivity
noted across the districts and regions, which show the potential for further
productivity growth through minimizing inter-district and inter-regional
differences on the one hand, and inter-farm variations on the other, by
improving access to technology ann resources by small and marginal
farmers. Their empowerment and group action could be the modes of
gaining access, and this could be by well designed affirmatic action in
.,upport of these vulnerable groups in agriculture.

6. The scope for development of horticulture seems enormous and so

also the problems of their modernization in production, processing and
trade. The potential of high productivity, would facilitate their entry in
competition with other traditional crops of cereals and pulses which
command higher priority in crop system due to food security. Demand for
fruits and vegetables has, however, been increasing due to income effect in
domestic markets and trade opportunities and attractive margins in world
markets.

7. It is necessary that zones of horticultural development are scientifically

identified on the basis of agro-climatic parameters and availability of
resources for planning horticultural developm~nt. Horticultural Estates may be
started for each zone with investment package for technology, high tech
production and processing to secure economies of scale for better
competitive edge.

8. The limiting factors are Iack of supportive infrastructure for specialized

production, processing, packaging and shipment; and want of less expensive
transport modes and facilities. Market intelligence is partial and sketchy in
its coverage, and selective in access and also in distribution. The entry of
corporate sector is a positive development and what seems more critical is
the ne~d for right types of agribusiness structure and roles. Participation by
small farmers who are there every where and who cannot be bypassed is
a matter of innovative thinking and motivation and effective intervention.

9. Forest occupy 17 per cent of geographical area of the State and it

155
has registered a growth of 0.4 per cent a year over the last forty years.
There have been various innovative programmes such as social forestry,
farm forestry and interface forestry which have paradigm shift in outlook
from conservation to development forestry. Some of the wastelands, 5.6
lakh hectare in extent, could be marked for development of agro-forestry
which, together with the existing forest area, could account for 21 per cent
of the total area. Further improvement could be set through upgradation of
forestry by choice of species, density and canopy and forest research need
to generate the relevant R&D methods and techniques.

10. Agricultural prices have links with other relevant prices and farmer
decisions on area allocation seem to depend on a set of relative prices of
crop they could grow and this pricing system is the crux of linear
programming method which ensures simultaneous consideration of prices of
competing crops. Over years, the real price of cereals and millets has been
declining Nhereas those of pulses have gone up very substantially.
Real price of groundnut has remained stable mainly because of inter-
vention through Oilseed Mission and the role of National Dairy Development
Board.

11. Agricultural finance ;s provided by commercial banks, cooperatives and

sugar factories at varying degrees; and the role of money lenders, traders
and relatives continue to be significant. Some of the case studies indicate
that PACB is an important institution whose services are locally available.
and if some of the limitations such as untimely provision of credit,
inadequancy of amount of credit and, most important, complicated lending
procedures are rectified, they become more efficient. Medium and large
farmers use commercial banks. Democratization of cooperative structure and
decentralized decision frame work offer scope and hope for institutional
credit to serve the needs of agricultural development.

12. Policy issues have been discussed in a normative framework of

Variable Resource Programming development scenarios for three periods of
five-year block each are generated. The solutions bring out optimum crop
allocation decisions to which potential users could respond based on which
the basic solution could be sensitized. There have been increases of 33
per cent in GSA, 58 per cent in crop income and 34 per cent in
employment over a period of 15 years. The growth rates likely to be
realized are 3.1 and 2.0 per cent for income and employment over a
period of 15 years which could be increased through technology
upgradation and organizational improvements. In the second part, the policy
interventions that would be required for servicing the optimum plans have
been discussed. A design has been presented for a systematic discussion
in an integrated way. A matrix of subsidies provided to farmers is

156
 constructed to guide the discussion. Project outlines have been indicated for
deciding on policy instruments and strategies.

13. Specific policy issues on investment in resource development, on

organizational matters concerning development, subsidies and incentives,
upgradation of R&D and service institutions and their capacity to handle
the upcoming problems of development have been discussed indicating
possible candidates of policy instruments. The basic thrust of agricultural
development is to internalize the experience of the past four decades in
the State and elsewhere. But that does not carry the development
preparedness far enough unless a superstructure is built around to handle
dynamic changes and challenges of development in agriculture in the
decades to come.
I

14. Liberalization implies unrestricted transactions in the market such that

individual and social benefits are maximized. Fr-ee market has some
limitations which tend to by pass the weak and vulnerable groups against
wl~!ch instrument of safety net provides protection and empowerment. That
a market friendly economy would presume the existence of institutions to
set rules of game in the market is a matter of conjectures warranting
careful and continous watch. Given this characterization of market, though
demand driven and yet institution managed. We may examine new issues
of development.

15. Subsidies, as we have argued elsewhere, are incentives for quick

transfer and adoption of new technologies in changing agriculture. That
subsidies do not reach those for whom they are intended are not
arguments against subsidies but they do remind the structural weakness in
the institutions and defective administration of subsidies. Second, they are
compensation for the income foregone, invplving income transfer, because
of policy intervention by the state for reasons of food security, cheap wage
goods and entitlements. Whatever be the point of subsidy such as power,
water and fertilizers, there is a need to (a) rationalize the level of subsidies
and target to those concerned and (b) for transparency of operations
through involvement of PAis and NGOs such that the objectives of
subsidies could be realized effectively.

16. New market opportunities arise for production and marketing

demanding a new set of inputs such as hybrid seeds, biofertilizers and
biopesticides which are environmentally safe and friendly. Investment in
private- sector on these new products is small and scanty. The advantages
of frontier technologies that process these products are not accessed to
most of farmers due to limited supplies. There needs concerted efforts to
generate market intelligence, technology packages and promote factories

157
and servke centers. It is also necessary to ensure for quality control of
these new products. All the benefits and concessions available for industries
could be extended to them to bring in the spirit of competition. Perhaps
one needs to insist on economies of scale in production and marketing for
which promotional support and concessions could be extended by
government institutions.

17. The other major point of concern is post harvest technologies involving
processing, packaging and merchandising the value added products.
Relevant technologies are not available in a large measure. Investment in R
& 0 efforts on this area by public and corporate sectors is small and
woefully inadequate. Further, small and marginal farmers who are scattered
across rural sector as resource poor entities need innovative organizations
to bring them together as enlightened participants of agri-business. More
specially. capital and technology should be mobilized and there can be any
modes of production and types of organization suited to native
entrepreneurial environs and market initiative. More particularly so when they
seek to globalize and compete with other countries quality, efficiency and
aggressive market strategies are to be promoted and fostered.

18. For development of horticultural products, concerted efforts are

necessary for markets access. acquisition of capital and technology for
production under high tech controlled and processing. A State Board of
Trade in fruits, vegetable and flowers could be established to help to solve
the teething problems of the infant industry to compete with the world
giants. Quick, timely and result oriented programmes are needed. Import of
equipment import substitution and bilateral agreements and technical
collaboration are of the major concern of this industry.

19. The role of agri-business is getting accepted both in domestic and

world markets. One could draw lessons from recent experience in the
coastal acquaculture and environmental issues. Accountability could be the
touch stone to evaluate the performance in relation to social responsibility.
It has become essential to formulate a set of rules for this game such that
expectations match performance to subserve social needs. As business
institution, it brings new business methods and ethics to bear upon the
otherwise subsistence and inward looking enterprises, which are subject to
social and economic constraints of farming. More rewarding. it imparts the
much needed dynamism for agriculture which will be the pass word for
development in the emerging century.

20. Bureaucracy is an institution concerned with administration and

management of development programmes and this has to face challenges
of getting things organized and process get going. Philosophy and

158
institutional aspects warrant new approaches, mission and commitment for
open and transparent actions in collaboration with private corporate sector.
Their programmes need to be participatory and hence they require
decentralized decisions. Fortunately, PR! have begun to assume
responsibility for development planning and have initiated the process. R &
o efforts and training would help to professionalize agricultural development
in the State. Convergenc.e of various programmes tor poverty alleviation and
employment assurance would provide a rationalized base for action plans
under agro-climatic regional planning system which is basically resource
based, technology oriented and farmer based.

159
 '''L"t..1. " \ C' '<-I
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Referenqt$, 35 A ~{\\s~~ '\~

Rl/~.J ,1 \. l 'I
Adiseshiah, Malcolm (1992) The Gap in Indian Economic Reforms Policy To-day: Agriculture, Endowment
Lectures on Social Sciences, 1991, Centre for Agricultural and rural Development Studies. Tamil Nadu
Agricultural University, Coimbatore.

Ascher, Willam and Robert Healy (1990) Natural Resource Policy Making in Developing Countrif\s. Duke
University Press, Durham.

Dantwala, M.L. (1993) : "Agricultural Policy Prices and Public Distribution System A Review", Indian J. of
Agri. Econ. XLVIII (2): 173-186.

EPW Research Foundation (1993) "Poverty Levels in India: Norms, Estimates and Trends", Econ. PoUt.
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Govemment of India (1963 & 1987): All India Reports on Agricultural Census 1976-n and 1980-81, Ministry
of Agricultural, New Delhi.

_ _ _ _ _ _(1987) : Report of Expert Group on Cropping Pattem, Ministry of Agriculture and Cooperation.
New Delhi.

______ (1 ~93) : All India Bulletin on Input Survey (1986-87), Agricultural Census Division, Ministry of
Agriculture, New Delhi.

Govemment of Tamil Nadu. Evaluation and Applied Research Department, Tamil Nadu Economic Appraisal.
various annual issues.

_ _ _ _ _ (1994) : Basic Agricultural Statistics, issued by the Commissioner of Statistics, Chennai

Parada, R.S. (1992) : Crop Science Research for Sustainable Agriculture in India. Dr. C.V. Chalam
Memorial Lecture, Tamil Nadu Agricultural University, Coimbatore.

Poduval, R.N. (1987) : Foodgrain Economy of Tamil Nadu, Emeral Publishers, Chennai.

Rajagopalan, V. (1967) : Some Aspects of Growth in Over-populated Countries Indian J. Agri. Econ. XXIV
(4) : 110-116.

_ _ _ _ _,(1963) : "Deceleration of Rates of Agricultural Growth in Tamil Nadu Trends and Explanatory
Factors", Indian J. of Agri. Econ. XXXVIII (4) : 568-584.

_ _ _ _ _(1991) : "Integrated Watershed Development in India: Some Problems and respectives', Indian
J.Agri. Econ. XLV(3) : 241-250. ,,~...-I-. ... ~. _
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