Meaning and Definition of Agriculture Economics | Nature and Scope
Agriculture Economics is an applied social science that deals with how producers, consumers, and societies use scarce and natural resources in the production, processing, market, and consumption of food products. ORIt is the application of economic principles to agriculture. OR
Agriculture is the combination of two words: Agro means field and culture means cultivation. Thus agriculture means the cultivation of land, planting, and growing of food. OR
It is a practice of cultivating the land and growing crops and increases of livestock. OR
It may be defined as the production, processing, marketing, and distribution of crops and livestock. OR
It may be also defined as the science in which principles and methods of economics are applied to the special conditions of agriculture. OR
It is an applied science which mainly concerned with economic problems that are associated with farmers’ efforts to make a living. Farmers mainly face three problems: 1-Production, 2-Financing, and 3-Marketing.
Nature of Agricultural Economics
The nature of agricultural economics is such that it borrows most of the principles from its parent body knowledge (general economics), thus there is no basic difference between general and agricultural economics. The need to study separate these two is that agricultural economics does not imply the direct application of the principles of economics to the field of agriculture but the modification of the economic principles, required to be made before being applied to agriculture are so large and varied that there is a complete justification for studying agricultural economics as a separate body of knowledge.Micro as well as Macro
When the subject of study is individual farmers then it is microeconomics and when we study the agricultural economy as a whole then it is called macroeconomics.Static as well as Dynamic
The basic difference between the two is that in the former, the time variable is not taken into account while the latter analysis deals with a period of time. In the present day dynamic concept is gaining momentum.Applied science or Pure science
Agriculturist economists such as Frosten and Leoger have classified it as an applied science as it is concerned with the identification, description, and classification of the economic problems of agriculture. Thus, agricultural economics is concerned with the evolving of appropriate principles that the amount of land, labor, and capital that the farmer should use to maximize his profit and use the factors efficiently.Science or Art
Agriculture is the science and art of cultivation of crops and raising livestock and is not only a mode of livelihood but also a way of life. Agricultural economics is a science because it relies on the principles and verifications of the data. It is an art because it deals with the various ways of application of the principles and suiting the conditions.Scope of Agricultural Economics
The agriculture sector is considered to be the most important in every country's scenario. The scope of agricultural economics includes production, distribution, consumption, and government activities in relation to agriculture and farm enterprises. To be more specific, the scope of agricultural economics can also be analyzed from the political aspect. Self-sufficiency in food production can reduce foreign dependence on food supply and raw materials, especially in times of crisis. Hence, the scope of agricultural economics is extended to the followings;1. Demand, Supply, and Prices Agriculture Goods
All the economic concepts of economic theory are well applicable in the case of agriculture economics such as demand, supply, price, the elasticity of demand, the elasticity supply, supports prices, price controls, and subsidies.2. Economics of Agriculture Production
In agriculture economics economists study agricultural goods in the following respects;Economists study farms in different aspects, are the sizes of the farms are economic or non-economic, whether are they produced for the market or only for themselves, and also whether the farmers are risk-takers or risk-averters. In addition, what is the nature of the cost and production they have, are they using modern or traditional techniques and technology? Generally, the farmers are looked like enterprises and then their production and cost functions are evaluated.
In agriculture, economics economists also study the economic nature of land protection and land reclamation how the land can be protected from water-logging and salinity and also the nature of the land-tenure system; what type of relations exist between the farmers and landowners, and who is possessed major share or by small farmers or by owners and its impacts on production and productivity, and how can be it a dynamic sector of the economy.
3. Agriculture Credits
The peasants and farmers are mostly poor and in need of finance both for production and consumption. Hence, in agriculture, economics economists study agriculture loans, their nature and uses, their need and costs, sources, and proper utilization.4. Marketing of Farm Products
In agriculture, economics economists study the kinds of agriculture markets, methods of sales, the role of middlemen, standardization of agriculture products and their transportation, role of co-operatives and govt. to deal with problems in agriculture markets.5. Farm Policies and Programmes
In agriculture, there are big fluctuations exist in the output prices and products which badly affect poor peasants. Therefore, government devises policies regarding farms and provides subsidies, to set minimum procurement prices for agricultural Goods like seeds, fertilizers, and water. Thus, the rise in the prices of agricultural goods led to increasing incomes of big farmers and therefore they are required to some taxes. Economists study agricultural taxes and their effects on agriculture.6. International Agriculture Trade
Food is a basic need for human beings which is sometimes affected by climate conditions. Sometimes a country fails to meet the requirements of its people due to drought, floods, or any other occasions. Therefore, they obtained the food product from other countries and with this the foreign trade of agriculture. goods come into being. Now international agriculture trade and its other aspects are discussed in agriculture economics.Role of Agriculture Economists
Role at Micro-Level
Agricultural Economists at the micro level are concerned with issues related to resource use in the production, processing, distribution, and consumption of products in the food and fiber system.Production Economists
Production Economists examine resource demand by businesses and their supply response.Market Economists
Market Economists focus on the flow of food and fiber through market channels to their final destination and the determination of prices at each stage.Financial Economists
Financial Economists are concerned with issues related to the financing of businesses and the supply of capital to these firms.Resource Economists
Resource Economists focus on the use and preservation of the nation’s natural resources.
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