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agricultural production economics agr#403

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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
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

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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
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