Report of the Jha Committee on Food Grain Prices For 1964-65 Season

Jha Committee Report

Department of Agriculture, Ministry of Food and Agriculture Government of India

Report of Food Grains Prices Committee

Preface

The Foodgrains Prices Committee was appointed by the Ministers of Food and Agriculture on 1st August 1984, under the chairmanship of Shri L. K. Jha, Secretary to the Prime Minister, to advise him on the determination of the minimum and maximum prices of rice and wheat for the 1904-85 season. The Committee was later asked to suggest prices of coarse foodgrains also for the same season. The Committee submitted its report on the 24th of September 1964. In the light of the recommendations of the Committee and the views of the Chief Ministers and Food Ministers of States Governments, Government decided and announced, on 13th October 1964 the produce prices for foodgrains as also the maximum wholesale and retail prices for rice for the 1964-65 season.

The Committee was also asked to recommend the terms of reference which would be suitable for an agency to provide advice on’s continuing basis, on price policy and price structure in the future “The Committee submitted its recommendations on this aspect on 24th December 1964

The report of the Foodgrains Prices Committee on the determination of prices of foodgrains Part-I and Part-II of this document. Part III gives the views of the Committee regarding the forms of reference and composition of the Agriculture Prices Commission.

B.SHIVARAMAN, Secretary to the Government of India

19 October 1965

CONTENTS

PART-1DETERMINATION OF PADDY AND RICH PRICES FOR THE 1964-65 SEASON
1. Introduction
2. Paddy and juice Prices for the 1964-65 Season.
3. Mesure for satisfactory implementation of Price Policy
PART-IIPRODUCER’S PRICES FOR WHEAT COARSE GRAINS AND GRAM
PART-IIITERMS OF REFERENCE AND COMPOSITION OF THE AGRICULTURAL PRICES COMMISSION
TablesA. Minimum Wholesale Prices of Coarse Padily.
B. Maximum Ex-Mill Wholesale Prices of Course Rice (Bagged) Recommended by the Committee.
C. Illustrative Statement showing Maxinent Retail Prices of Coarse Rice of Certain Consuming Centers.
Contents of Jha Committee Report 1964-65

PART-1

DETERMINATION OF PADDY AND RICE PRICE FOR THE 1964-65 SEASON

  1. INTRODUCTION

1.1 The Minister of Food and Agriculture appointed on 1st August 1964, a Committee under the Chairmanship of Shri LK Jha, Secretary to the Prime Minister, to advise the Minister of Food and Agriculture on the determination of the prices of rice and wheat for the 1964-65 season. The other members of the Committee were Shri T. P. Singh, Secretary, Planning Commission, Shri B. N. Adarkar Additional Secretary, Department of Economic Affairs, Ministry of Finance: Prof. M. L. Dantwala, Department of Economies, University of Bombay, and Shri S. C. Chaudhri, Economic and Statistical Adviser, Ministry of Food and Agriculture. Dr. B. P. Dutia, Deputy Economic and Statistical Adviser, Ministry of Food and Agriculture, was co-opted as Secretary of the Committee. The Committee was asked to advise on:

(a)the determination of producers’ prices in respect of the 1964-65 season, first for rice and then for wheat on an all-India basis with such quality-wise and region-wise variations as might be necessary, which are fair and economical and also the reasonable wholesalers’ margins, retailers’ margins, and consumer prices;
(b)the terms of reference which would be suitable for an agency to provide such advice on a continuous basis in respect of future seasons, the suitable form of such agency, and the kind of personnel it should have; and
(c)the best manner in which the work of such an agency could be fitted in with arguments being made for advice ab policy in regard to wages, incomes, and savings.

Later, the Committee was so asked to suggest prices of coarse food grains for the 1964-65 season.

1.2 A questionnaire was issued to the State Governments to obtain information on the present level of producers, wholesalers, and retailer’s prices and margins at different stages of marketing at present and under normal conditions: The State Governments were iso requested to give their views on the fair and reasonable levels of producers and consumers’ prices of paddy/rice in the 1964 season and also the fair and reasonable margins at different stages of marketing. Some leading economists and important foodgrains trading organizations as well as the Bharat Krishak Samaj (Farmers Forum) were requested to furnish their views on the question of determination of rice prices for the 1964-65 season.

1.3 We had discussions with representatives of most of the State Governments, with some economists, including visiting foreign economists, as well as with representatives of important foodgrains trading organizations.

1.4 Since about the middle of 1964, the structure of food grain prices has been causing a good deal of concern. To deal with this situation, the Government of India have taken a number of decisions of which the following are the most important:

iPrices of rice for the Southern Zone were brought under statutory control.
iiFood Corporation of India is being formed.
iiiAn agency to advise Government on a continuous basis in respect of prices of foodgrains in the future is to be set up.
ivThe price policy in respect of foodgrains will be eventually integrated with an overall policy in regard to wages, incomes, and savings

1.5 In addition, there are in existence a number of measures adopted at the State levels such as controlled prices in West Bengal, restrictions on inter-State movement, and certain zoning arrangements.

1.6 The evolution of a long-term policy will clearly be the responsibility of the agency referred to in (iii) of paragraph 1.4 above, the terms of reference for which we have suggested in Part Ill of our Report. Our task, therefore, seems to be that of dealing with what will be a phase of transition from a somewhat disorganized and distorted marketing system to what would be a more stable and better-regulated system.

1.7 Before formulating our recommendations, we should like to state our understanding of the trends in the economy which have to be taken into account in evolving a long-term policy. These are:

(a)The demand for food grains, particularly rice and wheat, is on the increase from year to year. This is because population is growing and incomes are rising There is a long-term trend towards Increased levels of consumption as well as substitution of coarse grains like maize, jowar, etc., by wheat and rice. Domestic production, on the other hand, has not been rising as fast as the population during recent years, and the country’s capacity to pay for imports is severely limited. In the circumstances, shortages even of a marginal nature, are likely to persist and there is likely to be a steady upward trend in price. levels to bring demand and supply into balance.
(b)The upward trend in prices, although a matter of concern to consumers can play a helpful role if it has the effect of stimulating domestic production of food grains. This stimulus can come about, firstly, by arresting the trend to switch over from food crops to cash crops which has been at work for some years. Secondly, it can encourage the farmer to adopt improved technology and increase his inputs in the production of food, provided the availability of fertilizers, water, better seeds, and other facilities is ensured at reasonable prices. At the same time, it has to be remembered that if high prices do not go to the agriculturist but inflate the profits of middlemen, there will be no favorable impact on production. It is also important that even in the long-term interests of the consumer, the price to the producer should not be lower than what would enable and encourage him to maximize his production.
(c)In the case of a basic necessity of life like food grains, a relatively small shortage can lead to a sharp increase in prices. Once an upward trend in prices becomes evident, there is a tendency on the part of everyone-consumer, trader and producer to hold larger stocks. This tends to increase inventory demand and to reduce supplies artificially and leads to a further price increase. In a rising mark, hoarding becomes more common. Thus, an upward spiral in prices sets in, and a shortage in supply even of a somewhat insignificant nature can cause a major upsurge in prices. There is reason to believe that something of this nature has taken place in the economy since about the middle of 1964. If imports on a large scale were possible to meet shortages, either due to production being inadequate or due to hoarding, the tendency could have been checked. As this is not possible, it seems clearly desirable that such measures of control over the distributive trade should be introduced as would prevent stocks being withheld in anticipation of a price rise or with a view to forcing a price rise. At the same time, the trade should be enabled to discharge its legitimate functions which include carrying stocks from harvest to harvest, and the return to it whether the operation is undertaken by the State, by private agencies, or by both should be adequate for this task to be fulfilled.
(d)Once prices assume a marked upward trend, uncoordinated attempts, at varying levels of authority, Centre, State, and District, at reconciling the conflicting claims of producers, consumers and traders, lead to the imposition of restrictions or other impediments to the free movement of foodgrains. resulting in wide disparities in prices in different parts of the country. Such distortion of the price structure can be effectively remedied only by action on the national level. There seems to be a clear need for a machinery to be established to ensure an even flow of supplies from the producer to the consumer and from the surplus to the deficit areas It should aim at having at its disposal sufficient stocks to overcome temporary shortages and to meet essential needs. Elimination of zonal or inter-State movement restrictions, which is a sine qua non of an integrated price structure, will be feasible only if arrangements exist for a continuous watch over trade movements and for timely interventions by Government to ensure that such movements are neither excessive nor deficient.
(E)in so far as available supplies are less than the consumer demand, a part of the demand must remain unsatisfied. IF demand is not controlled prices rise and the lower income groups cut down their consumption. The alternative to a price rise is some form of rationing, so that shortages may be spread more evenly between different areas and groups with varying income levels.

1.8 It is against this background of considerations that we have approached the task before us. We have also felt it desirable not merely to consider what the prices at different levels should be, but also how they should be made effective in operation.

Producers Prices

2.1 We have conceived of the producers’ price as being a minimum price or a support price at which Government should undertake the responsibility for purchasing any quantities that may be offered at approved assembling points. The assembling points will have to be defined in respect of each State and the responsibility of transport to such points should be that of the farmer. The Government should keep itself ready to make purchases at the minimum prices, whenever necessary, and such purchase operations should not be confined only to rail-head centers but should be undertaken at assembling points even in remote and inaccessible areas, where occasions requiring purchase at support prices are likely to arise the most

2.2 We have referred earlier to the importance of assuring such a price to the producer as would encourage him to maximise his production. At the same time, we have been unable to go along with the view that a mere increase in producers’ prices will serve the objective of maximising production. The increase in production of foodgrains, which we aim at, has to be achieved primarily by adopting better techniques of cultivation with increase in productivity per acre rather than by diverting land from other crops which may be of greater value to the economy as a whole. Up to a point, higher prices can help in encouraging the adoption of better techniques of food production and greater use of inputs provided the facilities in the shape of fertilizers, water, better seeds, etc., are there and all that the farmer needs is a better price to make full use of them. Further, the likely effects on the wage-cost structure, the cost of living, and the inflationary effects that might follow the fixation of very high producers’ prices need also to be kept in view. Apart from these considerations, we have also had to bear in mind that the appointment of the Committee was made in the context of consumer prices which were generally regarded as being too high for the general levels of income prevalent in the country. We feel that the optimum relationship between agricultural prices and the general price level, the relative prices of substitutable crops, as well as the impact of agricultural price policy on the economy as a whole are long-term issues, which will have to be considered carefully while evolving the agricultural price policy on a more comprehensive basis. We have referred to these questions again in the later part of our Report while recommending the functions of the Agriculture Prices Commission.

2.3 Weighing these factors together and taking into the account the average price of paddy during the last harvest (i.e.1963-64) as well as in the previous three harvests (i.e.1960-61, 1961-62, and 1962-63) and also the recommendations of the State Governments we have

Note: Report is under process and soon it will be updated and completed.

Leave a Comment