Supply

1
AGRICULTUREECONOMICS AND POLICY
2
Chapter Outline
3
IMPORTANCE OF AGRICULTURE SECTOR
The specific contributions of agriculture sector
to economic development of a country are as under
4
Farm Production

• Food Crops
• Wheat
• Rice
• Maize
• Barley
• Cash Crops
• Cotton
• Sugarcane
• Tobacco
• Oil Seeds and Vegetable Oils
• Fruits
• Pomegranates
• Apples
• Melons etc

5

• Agriculture provides food and fiber- The key
  contribution of agriculture is that it provides
  food (wheat, rice etc) and fiber (cotton, jute
  etc) to the growing population of the country. If
  a developing country, whose economy is based on
  agriculture, fails to meet its food and fiber
  requirements, then it has an adverse effect on
  the economy. The direct effect of the shortage of
  food is that its price immediately goes up in the
  country. With the rise in prices of food, the
  nominal wage rates of the labour are forces to go
  up. As a result in the rise of wages, the
  investment and the profits of the industries
  begin to decline. Employment and growth is
  adversely affected.

6

• Source of Timber (Wood ) Forestry which is the
  vital area of agriculture sector is a source of
  timber. Timber is very important for furniture
  making business , making sports goods, houses
  construction as well as shipping industry etc.
• Source of Milk and HoneyLivestock and
  Bee-keeping is an important area of agriculture
  sector which provides Milk and Honey to the
  people. Milk and Honey are very important for the
  health of the people as well as they are used as
  a raw material for various industrial production.

7

• Source of Poultry Fish meatPoultry and
  Fishery are two important areas of agriculture
  sector. Poultry farming provides Poultry meat and
  eggs which are the basic need of the people
  now-a-day beside a big number of people being
  employed. Similarly fishery also provides
  nutritious food to the people as well as earn
  foreign exchange for the country.
• Contribution to GNP-Agriculture sector plays a
  very dominant role by making a greater
  contribution to the GDP of the country. As in
  case of Afghanistan the contribution of
  agriculture sector to GDP is about 30. It means
  that despite structural changes n the economy,
  the share of agriculture is still at the top
  amongst all other sectors of the economy.

8

• Provision of Capital Another key contribution
  of agriculture is that it provides capital to the
  state for meeting the requirement of economic
  development. The government can secure the flow
  of capital out of agriculture in a number of
  ways
• Tax on agriculture income Agriculture generates
  capital by imposing tax on the income of the
  farmers.
• Purchase of agricultural commodities at
  relatively low prices The government sometimes
  purchases the agricultural commodities at low
  prices and then sells them at higher prices in
  the domestic as well as in the foreign market.
  The difference in prices so secured is used for
  development purposes.
• Promoting Rural Savings another mean of securing
  capital from agriculture sector is to encourage
  farmers to deposit their saving in banks. The
  amount thus mobilized is used for development of
  farm and non-farm sector.

9

• Source of Foreign Exchange Earnings The
  countries like Afghanistan which have a vast
  agriculture sector can depend upon exportation of
  agriculture products like rice, cotton,
  vegetables, sugarcane, fruits and certain seeds
  etc. accordingly, a sufficient amount of foreign
  exchange can be earned through the exportation of
  these agriculture goods. Such foreign exchange
  can be utilized to import the necessary machinery
  and plants etc which will be helpful in
  accelerating the pace of economic development.

10

• Provide Employment Opportunities- The
  countries like Afghanistan which have a limited
  industrial setup, the agriculture sector serves
  as a source of big employment in the country. It
  is the agriculture sector which not only provides
  employment opportunities but it also gives rise
  to diversification in such job opportunities.
  According to an estimates 60 - 70 of population
  in LDCs live in rural areas which are directly
  and indirectly attached to agriculture.

11

• Provide Raw Materials to Agro-based Industries-
  Agriculture sector provides raw materials to
  the agro-based industries. For example,
  agriculture sector provides sugarcane to sugar
  mills to convert it into sugar. The
  development of textile industry and its allied
  fields is entirely attributed to a fairly large
  cotton production in the country. Agri-based
  industries can be established on the basis of the
  locally produced raw material.

12

• Market for Industrial Products- The existence
  of agriculture sector becomes helpful in the
  extension of market. The expanding and
  progressing agriculture sector means the more
  incomes of the farmers. The agricultural
  development in the country increase the incomes
  of the farmers which will be spent on the
  purchase of industrial products like TV,
  Motorcycle, fans, Tractors, Harvesters,
  fertilizers etc are made in industries and are
  sold in the agriculture sector.
• Control Inflation Agriculture sector plays
  vital role in controlling inflation in the
  country. By producing more farm production, the
  prices of the basic commodities of the
  agriculture will be reduced which will help in
  curbing inflation in the country.

13

• Strategic Importance-
• For a long time, this has been a view that the
  terms-of-trade have a tendency to move against
  agriculture sector, i.e. the prices of
  agriculture commodities go on falling while the
  prices of industrial goods go on rising. But
  now-a-days, because of severe increase in
  population of the world, the demand for
  agriculture goods including crops, livestock,
  forestry and fisheries is rapidly increasing and
  in the coming future, the demand for agriculture
  goods is not likely to come down. This means that
  agriculture sector will occupy a strategic
  importance in the days to come. The food-stuff
  can be used as a weapon like oil to put a
  pressure in the world politics. Moreover, the
  self-sufficiency in food-stuff and its related
  fields will also be helpful in making an
  assurance regarding food security.

14
LIVESTOCK

• The term livestock is normally defined as animals
  raised to produce milk, meat, work, and wool.
• It includes beef and dairy cattle, sheep, horses,
  goats, buffalos, cows and Camels etc.

15
IMPORTANCE OF LIVESTOCK
16
Provide a Steady Food Supply
Livestock is a source of steady food supply. It
provides mutton, beef, milk etc for the daily
consumption for the human being.
17
Perform Work
Animals are used as motor power for agricultural
operations. They are used for ploughing the
fields.
18
Provide Transportation
Animals are used as motor power for
transportation purposes. They also transport
agricultural products from one place to another.
19
Provide Raw Materials to Industry
It provides essential raw material such as skins,
wool, animal hair, bones for some of the domestic
industries like carpets, rugs, leather, footwear
etc
20
Provide Pleasure and Recreation
Livestock is a source of pleasure and Recreation.
Horses are used to play Polo, Horse Races etc.
21
Poultry Farming
22
Poultry Farming.. continued

• Poultry production has emerged as a good
  substitute of beef and mutton.
• Chickens, Ducks and Turkey are the most important
  poultry species
• Today Poultry production is a large commercial
  industry worldwide.

23
Importance of Poultry Farming
Chicken and eggs account for a high percentage of
farm income.

• They provide us meat and eggs
• Short period required for growth and marketing.
  Other livestock require longer length of time
  from birth to market (e.g. cattle).
• Can adjust rapidly to changing economic factors
• feed, availability, cost, number of birds on feed.

24
Fisheries
Fishery is a sub-sector of agriculture. A fishery
may involve the capture of or raising fish
through fish farming called aquaculture.

• The fisheries sector has great potential to
  contribute to economic growth
• Provide nutritious seafood to the people
• Provide Employment Opportunities to million of
  people
• Reduce Poverty Level in the country.
• Earning foreign exchange through fish export

25
Fisheries. continued
It is playing a significant role in the national
economy by reducing pressure on demand for
mutton, beef and poultry. 1.5 billion people
depend upon fish for food, income
livelihood Fish are the most heavily traded food
commodity and fastest growing international
agricultural commodity. Developing countries
provide 77 of global fishing production. Directl
y or indirectly, the livelihood of over 500
million people in developing countries depends on
fisheries and aquaculture.
26
Beekeeping
Beekeeping (or apiculture) is the maintenance of
honey bees commonly in hives, by humans. A
beekeeper (or apiarist) keeps bees in order to
collect honey and beeswax, to pollinate crops, or
to produce bees for sale to other beekeepers. A
location where bees are kept is called an apiary.

• Provides employment to the people.
• It provides honey for domestic uses for various
  diseases and filing the nutritional needs.
• Honey is used in various medicines industries
• Countries are earning Foreign Exchange by
  exporting Honey.
• Bees is a source of crops pollination which leads
  to more agricultural production.

27
World honey production and consumption
Country   Production(1000 metric tons)   Consumption(1000 metric tons)  
Ukraine 71.46 52
Russia 52.13 54
Spain 37.00 40
Germany (2008) 21.23 89
Hungary 19.71 4
Romania 19.20 10
Greece 16.27 16
France 15.45 30
Bulgaria 11.22 2
Serbia 3 to 5 6.3
Denmark (1996) 2.5 5
28
World honey production and consumption
Asia Asia Asia
China 299.33 (average 245) 238
Turkey 82.34 (average 70) 66
Iran
India 52.23 45
South Korea 23.82 27
Vietnam 13.59 0
Turkmenistan 10.46 10
29
Thank You