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1
AGRICULTURE:
ECONOMICS AND POLICY
Chapter Outline:
1 Agricultural Economics and its Scope
Agriculture Sector:
The agriculture sector has the following main areas: 1. 2. 3. 4. 5. 6. 7. Crops Production Fruits Production (Pomiculture) Forestry (Silviculture) Live stocks Poultry farming Bees Keeping (Apiculture) Fisheries (Aquaculture)
2. Forestry
3. Live Stock
4. Poultry Farming:
5. Beekeeping:
6. Fisheries:
Agricultural Economics:
Agricultural Economics is a branch of economics in which the principles and methods of economics are applied to the agriculture industry. Agricultural economics brings under discussion those principles which are concerned with the problems of farmer such as What to produce? How to produce? How much to produce? How to sell? so that the farmer earn maximum net benefit and from which all the people of the society get benefit as a whole.
Agricultural Economics:
Agriculture Economics can also be defined as the knowledge and art of cultivating the soil of the land According to Goodwin, Agriculture Economics is the study of the allocation of scarce resources among those competing and alternative uses found in the production, processing, distribution, and consumption of agricultural commodities.
Agricultural Economics:
The problem of the scarcity has the vital importance in agriculture economics too because Land is limited and it is impossible to increase land with the help of human efforts. Keeping this fact in mind, the land should be utilized in such a way that we obtain the maximum production from it that result in the satisfaction of human being.
2. Problems of Agri. Sector and Remedial Measures: In agriculture economics, we will study in detail the problems in the various areas of agriculture sector like why the per acre production of the crop is low; why the share of forest is declining; why fisheries is contributing low to GDP; what are the problems of livestock etc. Moreover, we will suggest remedial measures for the various problems of the agriculture sector in order to increase the agriculture production to increase its contribution to GDP
3. Agricultural Credit: In case of developing countries the peasants are mostly poor. They are in need of finance both for consumption and production, therefore, in agriculture economics we study agri. loans, their nature, their use, their need, their sources and their proper utilization etc. 4. Agricultural Marketing: In agriculture economics, we study the kinds of markets, the prevailing methods of sale in agriculture markets, the functions of agri. Markets, problems of agricultural marketing, the standardization of agri. products and transportation of agri. products. Moreover, we also study the role of cooperatives and govt. to deal with the problems of agri. markets.
5. Demand, Supply and Prices of Agriculture Goods: In agriculture economics, we analyze the demand for, supply of and prices of agri. goods. In other words, all the economic concepts of economic theory like demand, supply, price, elasticity of demand, elasticity of supply, price controls, support prices and subsidies are well applicable in case of agriculture economics. In addition to these, we analyze the statistics regarding economic variables and trends concerning the production of crops, livestock, size of farms and volume of population etc as they influence the demand and supply of agri. goods etc.
6. Agricultural Policies and Programmes: There exists a greater uncertainty in agri. sector as there are big fluctuations in the output and prices of agri. Products. This badly affects the poor peasants and small farmers. In such state of affairs govt. devise policies regarding farms. As the government set minimum procurement prices for agri. Products. The government purchase agricultural goods. The farmers are provided with subsidies. The seeds, fertilizer and water are provided at lower prices.
7. Tax on Farm Productivity: Govt. is desirous of getting something from farmers in the form of taxes because the rise in prices of agri. goods had led to increase the incomes of the big farmers. Therefore the big farmers are required to pay some taxes. Thus, in agriculture economics we study agri. Taxes and their effects on farm productivity.
8. Agriculture and World Trade: Food is basic requirement of human being but the climatic conditions of the world do not remain alike. Sometime there is drought while on the other occasions, there may be floods. In such like situation situations the agri. Sector in so many countries fails to meet the requirements of rising population. Accordingly, the food and other agri. Products are obtained from other countries. With this the foreign trade of agri. Goods come into being. Now the question arises as to what are the determinants of world agri. Trade; how the international specialization of agri. Goods will come into being; and what will be the effects of such specialization. These like issues are discussed in agriculture economics.
9. Rural & Agricultural Development: The last part of agriculture economics is concerned with the problems of life in the rural area and with the policies and steps that can help in the development of the rural area which will have a direct and positive effect on the agriculture development.
Agriculture vs Industry
Agriculture sector is different than industrial sector in various ways. In the coming slides we will compare the agriculture and Industrial sector which lead us to the conclusion that agriculture economics should be studied as a separate discipline. Moreover, now-a-days agriculture has attained the status of industry. As the agri. Product is produced at a large scale on the farms. The efficient farm managers manage the agri. Farms. They calculate revenues and costs. The marketing of agri. Produce is made. The store and warehouses are setup in agri. Farms. The agri. goods are produced on commercial basis.
Common Production:
Various agricultural product have common supply such as with wheat the supply of straw, with meat the supply of skin increases. But in industry it is not common.
Inelastic Supply
The supply of industrial products can change with the change in prices in the market but the supply of agricultural products can not be increase. It has an inelastic supply.
Environmental Effect:
The weather change has a serious effect on the agricultural production and that is the reason due to which agricultural production is either surplus or shortage while industrial production is free from the weather changes.
Trade Union:
In agriculture, the labor are unorganized. They get wages below the subsistence level. Hence the financial position of labor is very weak. On the contrary, the industrial labor is well-organized. They get better wages. They formulate their unions. Because of non-existence of trade unions in agri. Sector, the relationship between the land-owner and the tillers remains stable, though the agri. Workers get lower wages.
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