Indian economy is basically an agricultural economy. A substantial portion of India’s national income comes from the agricultural sector.
A vast majority of India’s population is dependent on agriculture for its livelihood. Agriculture also provides employment opportunities to many, both directly and indirectly.
The production and marketing of agricultural goods poses certain peculiar problems for the producers. This is mainly because the agricultural goods possess certain peculiar characteristics. These are as follows:
Characteristics of Agricultural Goods
1. Agricultural goods are quickly perishable.
2. These are bulky in nature.
3. It is difficult to control both quality and quantity of output.
4. Product differentiation is not possible.
5. Nature plays a crucial role in production.
6. Agricultural goods have inelastic demand.
Problems faced in the production of Agricultural goods
1. Seasonal production
Unlike consumer goods and industrial goods which are produced throughout the year, agricultural goods can be produced only during a specific period in a year. There are summer crops and winter crops. Certain crops need lot of water. There are others that require only minimum water. In view of all these differences, all the crops cannot be grown in all the months in a year.
2. Difficult to control production
In the case of consumer and industrial goods it is possible for the producer to exercise direct control over production. But in the case of agricultural goods nature plays a vital role in production. If the cultivator has sown the seeds and is awaiting rains, failure of rains will hamper production. Agricultural production is much dependent on the availability of abundant water. Availability of water depends on rainfall.
3. Difficult to control quality and quantity of output
The producers of consumer and industrial goods can control both quality and quantity of output. It is not that easy in the case of agricultural production. Even if the producer (the farmer) uses good quality seeds, fertilizers and manures, the quality and quantity of output are determined mainly by natural factors.
4. Long waiting period
Production of consumer and industrial goods takes place almost continuously on a daily basis. But in the case of agricultural goods, the gestation period is too long. Thus, continuous production cannot be thought of.
5. Loss of crops due to pests and animals
The crops need to be protected from pests and animals. Every year, farmers suffer heavy loss of revenue due to crop loss caused by the activities of pests, insects and animals. To protect their crops, farmers, therefore, use pesticides, insecticides and so on. They also use electrical fences to safeguard their crops from cows, elephants and other animals.
6. Loss of production due to litigation
Another peculiar problem in agricultural production is that there is always litigation between the farmers over the land territory and other such issues. As a result, they may have to spend lot of time, money and efforts to win legal battles. This affects the time available for production and thereby affects output.
7. Small-scale production
In India, the number of small and marginal farmers is larger than the number of big landlords. The small and marginal farmers hardly own a few acres of land. The quantity of output they turn out is hardly sufficient for their family needs. In fact, most of these people produce for their families rather than for the market.
8. Use of primitive techniques of production
In developed countries, agriculture gets the same importance that the industry gets. But in India, although industrial development has reached a significant level, agriculture still remains a neglected sector.
The farmers follow the conventional methods of production which affect the yield. They do not have access to the latest machines and equipment because they cannot afford to have these.
9. Ignorance of the producers
Producers of consumer and industrial goods have greater awareness than the producers of agricultural goods. As a result, the former can adapt to any kind of situation and come out of the problem.
For example, the producers of consumer and industrial goods can modify or update their products in tune with the demand and market trend. But the farmers are conservatives. They cannot adapt themselves to changes. They prefer to grow the same crop they grow every year.
10. Lack of collective bargaining
Industrialists have their own associations through which they represent all their grievances to the Government and are able to find a solution to any problem. But in the case of agriculture, the farmers do not have any such prominent association. As a result, although they have grievances, they are not in a position to represent the same in a proper manner.