AGRICULTURAL PRODUCTION ECONOMICS

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INTRODUCTIONAGRICULTURE ????

“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.

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”

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AGRICULTURAL ECONOMICS

“ Principles & methods of economics applied to the special conditions of agricultural industry ”

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MEANINGSELECTION OF PRODUCTION PATTERNS

RESOURCE USE EFFICIENCY

OPTIMIZE THE OBJECTIVE FUNCTION OF FARMING COMMUNITY OR NATION

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GOALSTO PROVIDE GUIDANCE TO INDIVIDUAL

FARMERS IN USING THEIR RESOURCES MOST EFFICIENTLY.

TO FACILITATE THE MOST EFFICIENT USE OF RESOURCES FROM THE STANDPOINT OF ECONOMY.

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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”.

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OBJECTIVESTo 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.

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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.

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SCOPE OF SUBJECTAPPLYING ECONOMIC LOGIC TO

PROBLEMS THAT OCCUR IN AGRICULTURE

ANY PROBLEM OF FARMERS RELATED TO RESOURCES ALLOCATION.

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CONT…THE AGRICULTURE PRODUCTION

ECONOMICS IS CONCERNED WITH ANY PHENOMENA, WHICH HAVE A BEARING ON ECONOMIC EFFICIENCY IN THE USE OF RESOUECES

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BASIC CONCEPTS IN AGRICULTURAL PRODUCTION ECONOMICS

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BASIC CONCEPTSFARM:

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.

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BASIC CONCEPTSOPTIMUM 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.

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BASIC CONCEPTSSMALL 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.

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BASIC CONCEPTSTECHNICAL 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.

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BASIC CONCEPTSRESOURCES 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.

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Basic conceptsSTOCK 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.

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Basic conceptsCONTINUOUS 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.

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Basic conceptsEFFICIENCY : It means absence of wastage

or using resources as effectively as possible to satisfy the farmer’s needs and goal.

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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.

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Basic conceptsCOST 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 .

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Basic conceptsCONSTANT : 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.

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FEATURES OF AGRICULTURAL PRODUCTION VS COMPARED TO INDUSTRIAL PRODUCTIONFARMING A WAY OF LIFE DEPENDENCE ON WEATHERSEASONALITY OF PRODUCTIONPREISHABLE NATURE OF AGRICULTURAL

PRODUCTSJOINT PRODUCTSBULKINESS OF AGRICULTURAL PRODUCTSPROBLEMS OF STANDARDIZATIONTIME LAG IN PRODUCTION OF

AGRICULTURAL PRODUCTS.

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CONT….LARGE PROPORTION OF LANDLAW OF DIMINISHING RETURNSNATURE OF DEMANDEFFICIENCY OF CAPITALPRODUCER’s SHARE IN CONSUMERL’s

RUPEE

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Basic conceptsSHORT 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.