AGRICULTURAL PRODUCTION ECONOMICS AGR403 INTRODUCTION AGRICULTURE Cultivation production

AGRICULTURAL PRODUCTION ECONOMICS AGR#403

INTRODUCTION �AGRICULTURE ? ? “Cultivation & production of crops and livestock products” “Field-dependent production of food, fodder & industrial organic material” �PRODUCTION ? ? production is the act of creating 'use' value or 'utility' that can satisfy a want or need. AGR#403

ECONOMICS “To how people choose to use productive resources to produce various goods and to distribute these goods to various members of society for their consumption” AGR#403

AGRICULTURAL ECONOMICS “ Principles & methods of economics applied to the special conditions of agricultural industry ” AGR#403

MEANING �SELECTION OF PRODUCTION PATTERNS �RESOURCE USE EFFICIENCY �OPTIMIZE THE OBJECTIVE FUNCTION OF FARMING COMMUNITY OR NATION AGR#403

GOALS �TO PROVIDE GUIDANCE TO INDIVIDUAL FARMERS IN USING THEIR RESOURCES MOST EFFICIENTLY. �TO FACILITATE THE MOST EFFICIENT USE OF RESOURCES FROM THE STANDPOINT OF ECONOMY. AGR#403

DEFINITION “IT IS AN APPLIED FIELD OF SCIENCE WHEREIN THE PRINCIPLES OF CHOICE ARE APPLIED TO THE USE OF CAPITAL, LABOUR, LAND & MANAGEMENT RESOURCES IN THE FARMING INDUSTRY”. AGR#403

OBJECTIVES �To determine & outline the conditions which gives the optimum use of resources in the production of crops & livestock. �To determine the extent to which the existing use of resources deviates from the optimum use. AGR#403

CONT… �To analyze the forces which condition existing production patterns and resources use. �To explain mean and methods in getting from the existing use to optimum use of resources. AGR#403

SCOPE OF SUBJECT �APPLYING ECONOMIC LOGIC TO PROBLEMS THAT OCCUR IN AGRICULTURE �ANY PROBLEM OF FARMERS RELATED TO RESOURCES ALLOCATION. AGR#403

CONT… �THE AGRICULTURE PRODUCTION ECONOMICS IS CONCERNED WITH ANY PHENOMENA, WHICH HAVE A BEARING ON ECONOMIC EFFICIENCY IN THE USE OF RESOUECES AGR#403

BASIC CONCEPTS IN AGRICULTURAL PRODUCTION ECONOMICS AGR#403

BASIC CONCEPTS �FARM: Piece of land, where crops & livestock enterprises are taken up under a single management and has specific boundaries • AGRICULTURAL HOLDINGS: Total area of land owned by an individual or joint family whether cultivated by the family or rented out. • OPERATIONAL HOLDING: Total land area held under a single management for the purpose of cultivation. AGR#403

BASIC CONCEPTS �OPTIMUM HOLDING: Maximum size of holding which a family should possess. �ECONOMIC HOLDING: Land area which could provide a reasonable standard of living to the cultivators. �MARGINAL FARMER: Farmer owning less than 2. 5 acres of land. AGR#403

BASIC CONCEPTS �SMALL FARMER: Farmer owning land holding ranging from 2. 5 to 5 acres. �PRODUCTION: Process whereby some goods & services are transferred into other goods called output. �PRODUCT: An outcome of utilization of resources & services of resources. AGR#403

BASIC CONCEPTS �TECHNICAL COEFFICIENT: The amount of input per unit of output. �TECHNICAL UNIT: Convenient unit in production for which output & returns are calculated. �PLANT: Group of technical units. �RESOURCES: Anything that aids in production. AGR#403

BASIC CONCEPTS �RESOURCES SERVICES: Work done by a person or a machine or livestock. �FIXED REESOURCES: Resources which remain unchanged irrespective of level of production. �VARIABLE RESOURCES: Resources which change with the level of production. �FLOW RESOURCES: Resources which cannot be stored & should be used as & when they are available. AGR#403

Basic concepts �STOCK RESOURCES : Stock resources are those which facilitate for their storage , when they are no used in production period. �MONO-PERIOD RESOURCE : It is the resource which can be used only once in production. �POLY-PERIOD RESOURCE : It is the resource which is used in production process over several periods. �PRODUCTION FUNCTION: A systematic and mathematical way of measuring the relationship among different quantities of inputs or input services used in the production of a commodity and corresponding quantities of output is called production function. AGR#403

Basic concepts �CONTINUOUS PRODUCTION FUNCTION : This production function arise for those inputs which can be divided into smaller doses. Continuous variables can be known from measurement. �DISCONTINUOUS OR DISCRETE PRODUCTION FUNCTION : This production function arise for those inputs or work units , which are used in whole number. AGR#403

Basic concepts �EFFICIENCY : It means absence of wastage or using resources as effectively as possible to satisfy the farmer’s needs and goal. AGR#403

Basic concepts � TECHNICAL EFFICIENCY : It is the ratio of output to input. �ECONOMIC EFFICIENCY : It is the expression of technical efficiency in monetary value by attaching prices. AGR#403

Basic concepts �COST OF PRODUCTION : The expenditure incurred in producing a unit quantity of output is called cost of production. �VARIABLE : Any quantity which can have different values in the production process. �INDENDENT VARIABLE: It is a variable whose value does not depend on other variable. �DEPENDENT VARIABLE : A variable that is governed by another variable. AGR#403

Basic concepts �CONSTANT : A quantity that does not change its value in a general relation between variables. �COEFFICIENT: when rate per unit is calculated, we use the term coefficient, a multiplying factor. �SLOPE : Slope of a line represents the rate of change in one variable that occurs when another variable change. AGR#403

FEATURES OF AGRICULTURAL PRODUCTION VS COMPARED TO INDUSTRIAL PRODUCTION �FARMING A WAY OF LIFE �DEPENDENCE ON WEATHER �SEASONALITY OF PRODUCTION �PREISHABLE NATURE OF AGRICULTURAL PRODUCTS �JOINT PRODUCTS �BULKINESS OF AGRICULTURAL PRODUCTS �PROBLEMS OF STANDARDIZATION �TIME LAG IN PRODUCTION OF AGRICULTURAL PRODUCTS. AGR#403

CONT…. �LARGE PROPORTION OF LAND �LAW OF DIMINISHING RETURNS �NATURE OF DEMAND �EFFICIENCY OF CAPITAL �PRODUCER’s SHARE IN CONSUMERL’s RUPEE AGR#403

Basic concepts �SHORT RUN PRODUCTION FUNCTION: The planning period during which one or more resource are fixed. �LONG RUN PRODUCTION FUNCTION: It is a planning period during which all resources are varied in quantity. �ALLOCATIVE EFFICIENCY : It occurs when no possible reorganization of production can make any one better off without making some one else worse it. AGR#403