Commercialization of Agriculture Essay

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Commercialization of Agriculture


The British rule had pronounced and profound economic impact on India. The various economic policies followed by the British led to the rapid transformation of India’s economy into a colonial economy whose nature and structure were determined by needs of the British economy. One important aspect of British economic policy was commercialization of agriculture. Commercialization of agriculture which can be defined as a process where peasants start producing primarily for sale in distant markets, rather than to meet their own need for food or to sell in local markets, (Roy, 2007) has taken place at different times in response to different stimuli.

In the Indian context though a number of commercial crops such as cotton, tobacco and sugarcane were grown fairly extensively even before the advent of British rule (Habib, 1982), since land revenue had to be paid mostly in cash and the prices of these crops were much higher at that time relative to the prices of foodgrains, however, commercialization of agriculture at that time corresponded only to the requirements of traditional ‗revenue economy‘ in which the main form of revenue payable happened to be an indistinguishable mix of tax, tribute and rent (Raj, 1985).

No doubt the need to pay revenue in cash was the initial compelling force for the marketing of agricultural produce, the large surpluses so extracted from agriculture, without a flow of goods and services in the reverse direction in exchange, was basically an impediment to further commercialization (Raj, 1985). Thus, commercialization of agriculture in pre-British period existed only in its embryonic form. In true sense, therefore, agriculture of India got a commercial orientation during the British rule.

Industrialization in Europe and Commercialization of Agriculture in India

The commercialization of Indian Agriculture took place not to feed the industries of India because India was far behind in industrial development as compared to Britain, France, Belgium and many other European countries of eighteenth century. The commercialization of Indian Agriculture was done primarily to feed the British industries that it was taken up and achieved only in cases-of those agricultural products which were either needed by the British industries or could fetch cash commercial gain to the British in the European or American market. For example, several efforts were made to increase the production of cotton in India to provide raw and good quality cotton to the cotton-textile industries of Britain which were growing fast after the Industrial Revolution in Britain.

Therefore, cotton growing area increase in India and its production increased manifold with gradual lapse of time. Indigo and more than that, tea and coffee plantation were encouraged in India because these could get commercial market abroad. It was beneficial to the British planters, traders and manufacturers, who were provided with opportunity to make huge profits by getting the commercialized agricultural products at, throw away prices. The commercialization of Indian agriculture also partly benefited Indian traders and money lenders who made huge fortunes by working as middlemen for the British. This regard they acted as conduits delivering the products from peasants to the British company from where it was taken abroad.

Though markets and trade in agricultural goods existed in quite organized forms and on a large scale in the pre-British period but the market expansion in the British period marked a qualitative and quantitative break. According to Tirthankar Roy, there were three main qualitative changes.

‗First, before the British rule, product markets were constrained and subject to imperfections, given multiplicity of weights and measures, backward and risky transportation systems, and extensive use of barter. British rule and the railways weakened these constraints. By doing so, it enabled closer integration of global, regional and local markets. Second, from the time of industrial revolution, a new international specialization began to emerge as a result of trade. India specialized, in agricultural exports. Third, in turn, changes in the product market induced changes in land, labor, and credit markets‘ (Roy, 2007). The American Civil War also indirectly encouraged commercialization of agriculture in India: the British cotton demand was diverted to India. The demand of cotton was maintained even after the civil war ceased because of the rise of cotton textile industries in India.

The commercialization of India agriculture was initiated in India by the British through their direct and indirect policies and activities. Firstly, the new land tenure system introduced in form of permanent settlement and Ryotwari Settlement had made agricultural land a freely exchangeable commodity. The Permanent settlement by giving ownership right to the zamindars created a class of wealthy landlords; they could make use of this ownership right by sale or purchase of land. Secondly, the agriculture which had been way of life rather than a business enterprise now began to be practiced for sale in national and international market.

Thirdly, the political unity established by the British and the resulted in rise of the unified national market. Fourthly, the spread of money economy replaced the barter and agricultural goods became market items and the replacement of custom and tradition by competition and contract. Finally, the British policy of one way free trade also acted as sufficient encouraging factor for commercialization as the manufactured items in textile, jute etc. could find free entry in Indian markets, where as the manufactured goods did not have similar free access to European markets.

Impact of Commercialization on Indian Agriculture

It is interesting to note that though there is little controversy with regard to the role of British in initiating and promoting the forces which led to the commercialization of Indian agriculture, however, the nature of commercialization and its impact on the Indian peasantry had been very controversial issue, both during and after the British rule. To the nationalists, it was not out of the free will of the cultivators– commercialization of agriculture was forced and artificial (Dutt, 1906). This was so because the high pitch of revenue demand in cash compelled the cultivators to sell large portion of the produce of their fields keeping an insufficient stock for their own consumption. On the other hand the colonial bureaucracy argued that it was the market force rather than the pressure of land revenue that was drawing the farmers into the business of production for the market. The commercial crops were more profitable and this economic incentive led them to produce for sale and export, thus making it possible for them to increase per capita income.

Furthermore, the imperialist historiography and the colonial bureaucracy viewed commercialization of agriculture, the expansion of trade in agricultural products and the rising agricultural prices as an indication of the ‗growing prosperity of the peasantry.‘ (Satyanarayana, 2005). On the other hand anti-imperialist historiography (both nationalist and radical Marxist) emphasizing the negative impact of commercialization of agriculture and the integration implied that agricultural production in India was to be determined by imperial preferences and needs (Bhatia, 1967). Moreover, other historians following the neo-classical economic theory or with anti-imperialistic orientations (Marxists and non Marxists) have extended their support to either of the two.

The commercialization of agriculture was a forced and artificial process for the majority of Indian peasants. It was introduced under coercion of the British and not out of the incentive of peasantry at large. The peasantry went for cultivation of commercial crops under duress. Most importantly the life of the Indian peasant was tied to the highly fluctuating national and international market. He was no longer a deciding factor in agricultural practices. Further, by making agricultural land a tradable commodity, the peasant lost his security feeling. High land revenue demand forced him to take loan from the money lender at high interest rates. Failure to pay debt in time meant loss of land to the money lender at high interest rates. It led to land alienation and increase in the number of agricultural laborers whose conditions especially in plantation industry was pathetic.

He had to pay the land revenue due to the British government in time. Moreover, he had to grow commercial crop on a specified tract of his land under the oppression of planters. Also, Indian money lenders advanced Cash advances to the farmers to cultivate the commercial crops and if the peasants failed to pay him back in time, the land of peasants came under ownership of moneylenders. The poor peasant was forced to sell his produce just after harvest at whatever prices he could get. This placed him at the money of the grain merchant, who was in a position to dictate terms and who purchased his produced at much less than the market price.

It also resulted in reduced area under cultivation of food crops. The net result of this change was that Indian failed to produce even that much food crops which could provide even two square meals a day to its population. The misery was further enhanced became the population of India was increasing every year, fragmentation of land was taking place because of the increasing pressure on land and modern techniques of agricultural production were not introduced in India. While the upper class and British industries benefited-from it, the Indian peasants’ life was tied

to remote international market. It affected adversely the poor people of India; it became difficult for them to get even sufficient food. This becomes ample from the fact that ill 1880 India had a surplus of foodstuffs to the extent of five million tons and by 1945 it had a deficit of 10 million tons. George Byn records that from 1893-94 to 1945-46, the production of commercial crops increased by 85 percent and that of food crops fell by 7 percent. This had a devastating effect on the rural economy and often took the shape of famines.

Bhatia believes that the earlier famines were localized, and it was only after 1860, during the British rule, that famine came to signify general shortage of foodgrains in the country. There were approximately 25 major famines spread through states such as Tamil Nadu in the south, and Bihar and Bengal in the east during the latter half of the 19th century.

Great Depression and Indian Agriculture

A global economic depression broke out in 1929. However, the causes were more diverse and multi-pronged, with the decrease in costs and economic deflation of the post-war period being one of the main reasons. This deflation was caused by excessive manufacturing activities during the First World War. As a result, huge stocks of goods were piled up without being used. Wartime expenditure had reduced the countries of Europe to a state of heavy debt (Manikumra, 2003). With the outbreak of the Second World War, India was required to provide the resources for financing the war expenditures, which amounted to nearly 38 billion rupees from 194146.

Government attached excessive importance in maintaining war related production, as a result of which a comprehensive system of supplying food to the urban areas at controlled prices was put in place. The rural poor were not viewed as being essential to the war effort and so the main burden of war financing was passed on to them.

With the Great Depression, agricultural prices worldwide started falling earlier than industrial prices. As a result, the manufacturing-agriculture terms of trade turned sharply against agriculture. A substantial redistribution took place from the mass of rural producers to urban classes. Thus the combination of the long term trend of decline in per head production of foodgrains, a rise in per head production of exportable and the effects of deteriorating terms of trade created a set of pre-famine conditions in the sense that any substantial shock to the economic system under these circumstances was almost certain to precipitate famine in the absence of countervailing intervention. Taxes were jacked up and deficit financing by printing money was resorted to and money supply is estimated to have raised five folds in the four years from 1940.As a result there was a war boom and profit inflation. Rice price started an upward spiral from the last quarter of 1941, doubled within a year and quadrupled within eighteen months.

Also, the colonial government from the beginning strongly pushed exportable production by forcible cultivation of poppy in the early 19th century and export of opium to China, culminating in the infamous opium wars and indigo mutiny. With time overt force became less necessary as the pressure of revenue demand transmitted down to the peasant cultivators as the pressure of rental demand and in the case of landlords paying the revenue; compelled peasants to grow more commercial crops to sell and to commercialize food production itself.

Famine: Indian Agriculture strained by commercialization and Great Depression

The fall in prices had been higher in India compared to the rest of the world, the price of commodities manufactured in India rose dramatically compared to imports from the United  Kingdom or some other country in the world. The Great Depression had a terrible impact on the Indian farmer. While there was a steady, uninhibited increase in land rent, the value of the agricultural produce had come down to alarming levels. Therefore, having incurred heavy losses, the farmer was compelled to sell off gold and silver ornaments in his possession in order to pay the land rent and other taxes. Farmers who were cultivating food crops had earlier moved over to cash crop cultivation in large numbers to meet the demands of the mills in the United Kingdom. Now, they were crippled as they were unable to sell their products in India due to the high prices; nor could they export the commodities to the United Kingdom which had recently adopted a protective policy prohibiting imports from India.

An ex ante excess of investment over savings was converted to equality through forced savings extracted via food price inflation from the rural population. The consumption of food was then estimated at one and a half pound per individual and in 1945 it was 1 pound. Nearly thirty percent of the Indian population was estimated to be suffering from chronic malnutrition and under nutrition. Thus, the commercialization of agriculture in India by the British was also one of the important causes of the impoverishment of the Indian people. This resulted in a combination of famines and epidemics claiming around 2.7 to 3.1 million lives.

The most cited example is that of ―Bengal Famines‖. Romesh Chunder Dutt argued as early as 1900, and present-day scholars such as Amartya Sen agree, that some historic famines were a product of both uneven rainfall and British economic and administrative policies, which since 1857 had led to the seizure and conversion of local farmland to foreign-owned plantations, restrictions on internal trade, heavy taxation of Indian citizens to support British. The Great Famine of 1876–78, in which 6.1 million to 10.3 million people died and the Indian famine of 1899–1900, in which 1.25 to 10 million people died were the most destructive famines.

The Bengal Famine resulted in approximately 3 million  deaths. Generally the estimates are between 1.5 and 4 million, considering death due to starvation, malnutrition and disease, out of Bengal’s 60.3 million populations. Half of the victims would have died from disease after food became available in December 1943. Generally it is thought that there was serious decrease in food production during that time which is coupled with continuing export of grain.

However according to Amartya Sen, there was no significant decrease in food production in 1943 (in fact food production was higher compared to 1941). The highest mortality was not in previously very poor groups, but among artisans and small traders whose income vanished when people spent all they had on food and did not employ cobblers, carpenters, etc. The famine also caused major economic and social disruption, ruining millions of families.


Since colonial times, opinions would seem to have been divided between ‗optimists‘, for whom commercialization marked progress and a growing prosperity for all; ‗pessimists‘, for whom it marked regress into deepening class stratification and mass pauperization; and ‗skeptics‘ who held that it made very little difference and that its impact was largely absorbed by pre-existing structures of wealth accumulation and power on the land. However, capitalization in the 21 st century is said to create similar impact as colonial times, the only difference being that the later one was forced through oppressive policies, whereas the former would be market driven.

The farmer in his choice of crops attached greater importance to market demand and price than o other factors. Capitalism has mixed impacts on Indian agriculture. While it brings about liberalization and globalization that leads to trans-border availability of agricultural products all over the world, it breaks the economic self-sufficiency in India leading to greater dependency on market forces. Export of food products is one of the major reasons for inflation in India, it reduces the availability of agricultural products in India, increasing the demand and thus escalating the prices.

Trade and liberalization has also made Indian agriculture vulnerable to global crisis. However, it provides for a national economy and also brought about regional specialization of crops on an efficient basis. Hence, it is essential to learn from the lessons in the past and formulate policies to mitigate the negative impacts on Indian agriculture while being globally connected and liberalized.

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