Policies introduced during the period of rehabilitation (1949-52),
including land reform and stabilisation of domestic prices, brought
about significant recovery in agricultural production. But, at the same
time, agriculture did not present itself as a sector which could potentially
support industrialisation. First, the growth potential of agriculture was
very limited because of a lack of agricultural investment and technical
progress. Second, increases in output did not reduce the gap between
supply and demand in major agricultural markets. Alongside increases
in agricultural output and income, farmers consumed more grain.6 As a
result, the commodity rate of agricultural production and even net
amounts of supply to the market fell (the commodity rate measures the
ratio of output marketed to total output). On the other hand, because of
the expansion of the urban population, partly related to the planned
industrialisation, market demand rose significantly in urban areas.
Third, changes in agricultural demand and supply caused significant
rises in agricultural prices and their increasing instability. Increased
market fluctuations created obstacles to implementation of the government's
plans. Furthermore, there was concern that if agricultural prices,
especially grain prices, rose in the market, they would be transmitted to