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Commercialization of Agriculture in India


In this article we will discuss about the commercialization of agriculture:- 1. Subject-Matter 2. Causes 3. Process 4. Effects. 

Commercialisation of Agriculture # Subject-Matter:

Till the end of the first half of the 19th century, the Indian village was essentially self-sufficient. It had hardly any contact with the world outside except for the occasional visits of the grain or cloth merchant who carried the surplus of one village to make good the deficiency of another. In such a village, production was dictated by its self-sufficient character.

The village grew its own food, made its own implements and produced small-quantities of cotton and oil seeds—all for its own requirements. There were, however, two crops which could not be grown all over the country. These were cotton and Sugar-cane. Even in these, trade was severely limited in extent and restricted to a small area.


In such a self-sufficient community, which had only a few exchanges to make with the outside world, the need for money was rarely felt. Instead, grain was the standard of value which was used by the villagers for remunerating services or for effecting exchanges with each other.

However, from 1860 onwards, a series of developments took place which, on one side, broke the traditional isolation of the village, and, on the other, transformed the nature of agriculture from subsistence to commercial farming. The farmer, no longer, produced for his domestic consumption but “a good proportion of land went under the plough for purposes of export”.

The development of transport and foreign trade led to the introduction of a variety of new crops such as tobacco, groundnuts and potatoes while, at a later stage, the Commercial requirements of the Company led it to encourage the cultivation of indigo, jute, tea and coffee.

Dependent as he became on foreign markets, the farmer now realised that it was more paying to live on the profits earned from his farm than on the products that he grew. This change in Indian agriculture is called the commercialisation of Agriculture.


A point worth noting is that all these crops, which now came in vogue, had been grown for a long time on small patches around every village. The change which now came about was not so much an increase in the total area under commercial crops. This was not possible because India had also to produce sufficient food grains for her increasing population.

The change which came about with commercialisation was in the direction of increasing localisation and specialisa­tion. The irrigated areas in Deccan took to the cultivation sugar-cane; cotton growing became localised in Berar, Jute in Bengal and wheat in the canal colonies of the Punjab.

The commercialisation of agriculture, was brought about by a series of develop­ments which took place in the second half of the 19th Century.

Commercialisation of Agriculture # Causes:

The most significant event was the revolution in the means of transport. The railways were rapidly extended, the route mileage increasing from 432 in 1859 to 1990 in 1881 and 25,363 in 1901. At the same time, the work of road construction was also seriously taken in hand.


A road from Bombay to Agra was commenced in 1840 and by 1853, the Grand Trunk Road had been extended from Benares to Delhi. These newly opened roads and railways linked up different parts of the country, thereby facilitating the movement of crops from the surplus to the deficit areas and from the hitherto isolated village to the port towns from where it was shipped to distant parts of the world.

Every railway station became a Mandi or an export Centre to which traders and exporters alike-flocked.

The opening of the Suez canal in 1869 was another event of world-wide importance. The opening of the canal cut the sea-route between India and England by over 3000 miles and shortened the period of journey between Calcutta and London by 36 days.

Another factor was the ‘revolution and depression’ in the British shipping industry. The revolution was caused when, from 1869 onwards, the new and more efficient steamships began to replace the old, slow moving sailing vessels, especially on long distance routes.

The depression in British shipping was brought when, with the opening of the Suez Canal, the distance between England and the East was reduced and a good many ships were rendered surplus. This led to competition among shipping companies and a fall in freight rates.

For example, in the twelve years following the freight rates. For example, in the twelve years following the opening of the canal, freight rates from Calcutta to London fell to less than half i.e. from 55 shillings to 27 shillings per ton.

However, it was the American Civil War, which “clearly and dramatically revealed a break in the economic isolation of India” and brought about the Com­mercialisation of agriculture. The War transferred the British demand for Cotton from America to India as a result of which exports of cotton at once jumped from 5 lakh bales in 1859 to 12.6 lakh bales in 1865.

The exports of rice, wheat and other food grains also increased. Although the British demand for Indian raw Cotton fell off after the Civil War was over, it was largely compensated by the increase in domestic demand.

This growing demand for Indian agricultural produce helped in the spread of the tendency towards commercialisation. The area under commercial crops began to be extended with different parts of the country specialising in particular crops.


Yet another contributory factor was the introduction of money economy in the form of cash assessment of land revenue and the substitution of rent in kind by cash rents. Formerly, land revenue was realised in kind and, there­fore, the peasant was not faced with the problem of obtaining money.

Now that the payment was made in cash, he had to find money by the sale of his product. The problem did not end here. It was rather the beginning of a new one, the problem of finding a market for the produce. The market problem was solved by exports of food grains to England and this, in turn, created a favourable balance of trade out of which the ‘Home Charges’ were paid.

Commercialisation of Agriculture # Process:

The process of Commercialisation was further helped by the availability of new irrigation facilities which made it necessary for the cultivator to grow the more paying but specialised crops like sugar-cane if he was to be able to pay the water rate.

The cultivation of usual crops was no longer profitable and the farmer had to grow a high priced crop intended for the outside market, Indian or foreign. The overall effect was the same whether the former grew wheat in the Punjab or Sugar Cane in the Deccan for it had to be sold in the market rather than consumed at home.


A basic reason for the rapid growth in the cultivation of cash crops was the fact that such a development was welcome to the British authorities in India. In the first place, the commercial interests of the company were vitally linked up with the export of indigo, tea, coffee, hides and skins and opium.

These industries were mostly in the hands of Europeans; even servants of the company were allowed to trade in them. Besides, by the middle of the 19th Century, Britain itself had passed through the Industrial Revolution.

British industries then were the most developed in the world and, what is more, they were still expanding. British manufacturers, therefore, clamoured for raw-materials and this the govt. met by providing every facility and incentive for their production and export from India.

Commercialisation of Agriculture # Effects:

The commercial Revolution had a far reaching impact on the socio-economic structure of the Indian rural society. It brought a severe break with the past for it remained no longer necessary for a village or even a whole region to be self- sufficient in food-grains and other necessaries of life.


A national market for agricultural produce developed where the farmer could sell his crop as it was harvested and from where he could buy his requirements when the need arose. Thus, under the impact of new forces, the village could no longer remain the compact unit that it was before. Instead, the growing tendency was for each family to make ends meet as best as it could.

The commercialisation also brought about an enormous increase in foreign demand for India’s agricultural produce which, in turn, led to a general but steady rise in prices. In 1859-60, the total value of India’s exports amounted to Rs. 29 crores; it rose to rupees 69 crores in 1879-80 and Rs. 166 crores in 1906-7.

Wheat was mostly Exported to the U.K. Rice, however, was sent to every part of the world such as Ceylon, East Africa, West Indies and South America. Oil seeds were another important item of export. While choosing his crops, the farmer now began to pay greater attention to market demand and prices than to the needs of his home or village.

As India was linked up with foreign markets, price movements and business fluctuations in the world markets began to affect the fortunes of the Indian farmer to a degree never seen before. The same rail roads which carried away the Commercial Crops from the village brought back machine-made products.

The village weavers and traditional crafts, no longer sheltered by the backwardness and isolation of the village com­munity, now had to face the full blast of foreign competition. Many disappeared but more declined. The union of agriculture and hand industry, which had so far been the basis of village life, was disrupted.

As a consequence, million of workers, uprooted from their traditional occupations, were forced to find other ways to gain a livelihood or to supplement their meagre earnings. In most cases, the only source open to them was agriculture to which they flocked thereby steadily adding to the great pressure on land which still is one of the most prominent feature of the Indian economy.


The pressure of population should have served as a catalytic agent in the agricultural progress of the country. However, agricultural production was held down by what Daniel Thorner calls a “built-in-depresser”. The new land system, which the British had erected in the country between 1793-1850, enabled the land holders to take a more than substantial share of the produce of the soil.

The portion remaining to the tenants and crop-shares was so small as to leave them with no capital for land improvements. The hired labourers, mostly uneducated, ill-paid and having no stake in the increase of output, could hardly be expected to take interest in advanced techniques or even make proper use of better tools.

Even the peasant proprietors were handicapped by the lack of capital, all resources having been concentrated in the hands of the money-lander. This, combined with the insecurity of tenure and fragmentation of holdings, discouraged productive investment in agriculture.

To add, one habit of the farmer changed. In the past, village population had developed the habit of storing food-grains so as to be able to meet the shortage of lean years. The Commercial Revolution destroyed it all, for the farmer now began to sell the produce immediately at harvest time.

Food exports from the country steadily increased, reaching 1.25 million tons in 1880 while the stocks in the country appreciably declined so that the surplus of good year was no more available to replenish the supply in a year of natural scarcity.

The food situation was made worse by the farmers preference for cash crops. Normally, with expanding wheat exports, rising prices and warnings, repeatedly given by famines, of a growing food shortage in the country, farmers would have taken to the cultivation of food crops. This, however, did not happen.


Instead, the cultivator preferred growing cash crops substituting cotton, indigo, poppy and Sugar-cane for food-grains. This naturally had an adverse effect on the food- supply in the country as can be seen from the fact that the production of commercial crops rose by 85% while that of food fell by 7% in a period of half a century between 1895-96 to 1945-46.

This increase in the output of commercial crops, however, does not imply a corresponding increase in the area under these crops. Only the cultivator devoted his better quality and irrigated lands to their cultivation. Therefore, their yield per acre was higher.

The Commercialisation also had the effect of enhancing the power of the money-lender in the Indian country side. To produce crops for the market, the peasants required credit. They naturally turned to the money-lender, who came to occupy a place of unprecedented importance in the rural economy.

Even in pre-British days, the money-lender used to extend credit to meet occasional needs of the villagers but he occupied a subordinate position. The new systems of land tenure and land revenue, the new legal procedures and commercialisation of agriculture opened up a golden age for the money-lender.

The demand for his service became an inescapable part of the peasant’s life. A rapid rise in land values from the middle of the 19th Century further encouraged the money-lender to expand and broaden his operations.

Apart from the exorbitant rates of interest, which he was already charging, he now began to dispossess the peasant of his land and rent it cut. Money-lenders grew in numbers as well as wealth while peasants sank deeper in debt. No wonder, the indebted peasantry rose in revolt during the Deccan Riots in 1875.


Thus the commercialisation of agriculture, notwithstanding the gains it conferred on producers of special crops in certain areas, brought about deterioration in the overall food situation in the country by increasing exports of wheat and rice, reducing food stocks in the country, raising cereal prices and discouraging cultivation of inferior food-grains like Jowar and Bajra for which there was no ready export demand.

In addition, the commercial Revolution strengthened the trends which the new land systems had set in motion. Consequently, the gulf between the landlord and tenant as also between the rural creditor and debtor was widened. Rack-renting of the tenant increased and eject­ments became more frequent.

As for the land revenue, the completion of new periodical settlements just coincided with the period of rise in agricultural prices. This led to an all-round enhancement of revenue rates just at time when the failure of rains was frequent. This had every adverse effect on the economic condition of the small farmer, particularly in the ryot-wari areas.

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