Agriculture and economic development

 Meaning of agricultural economics:

Agricultural economics is that branch of knowledge which ties agriculture and economics together. It is an applied phase of the social science of economics in which attention is given to all aspects of problems related to agriculture.

It is a social science concerned with the allocation of scarce resources among the users associated with producing , processing and consuming the farm products.

According to Prof. Gray," Agriculture economics may be defined as the science in which the principles and methods of economics are applied to the special conditions of agriculture industry."

Agriculture economics as a science

Agricultural economics as an applied science which is mainly concerned with economic problems that are associated with farmers effort to make a living. Their problems  are numerous and varied in character but can be grouped under three main heads; (i) Production (ii) Marketing and (ii) Financing. It helps the farmer in deciding about what kind of food should he produce, which crop should be raise to maximise his profile and at what level should be price his products.

Thus, agricultural economics is concerned with the evolving of appropriate principles that govern the amount of land, labour and capital, which a farmer should use to farm most efficiently.

Role of agricultural economics 

As an applied science, an important role of agricultural Economics is to formulate the methods techniques and procedure by which the problems of agriculture may be tackled. 

Agricultural economics is an applied science and as such concerned with the identification, description and classification of the economic problems of agriculture to the end that these problems may be solved.

Agricultural economics is therefore, both theoretical and applied in its character.

The theory of agricultural economics deals with the development of principles of resources and as an applied science, it deals with the application of these principles in diverse production activities related to agriculture.

Scope of Agricultural Economics

 Agriculture is also faced with economic and sociological forces, which are characterised by relationships arising amongst men on account of agriculture being followed as a vocation and way of life. It is with these relationships that agricultural economists deal. These relationships comprise of;

a) Relationship of contact (supplementary, complementary or competitive) between the different branches of the enterprise such as the simultaneous raising of cereals and animals on the same farm.

b) Relationship of activity between the different means employed in the process of production as in the simultaneous employment of machinery and human labour.

c) Relations of value between the means employed in production and the product itself 

d) Commercial relations with the people to whom farmers sell their products or from whom they buy their requirements.

The scope of agricultural economics is, thus , extended to the distribution and consumption problems of farm products as well, what to distribute, among whom to distribute and on what basis to distribute , what to consume and how much to consume are, therefore, some, of the important questions deals with agricultural economics.

Nature of Agricultural Economics

Agricultural economics is both a social science as also a natural science. As a social science, it does not differ significantly in its scope from general economics.Agricultural economics is subject to all such influences as exist within the domain of social sciences.

Economics calculations would, therefore, follow the same standard of accuracy or inaccuracy as in general economics.

On the other hand, agricultural economics as a natural science deals with a throughout examination and evaluation of scientific innovations suggested by soil scientists. In facts, agricultural economics owners in the present form to agronomy itself.

Agricultural economics is essentially considered to be an applied science for the sole reasons that it is the practical wisdom of an agricultural economist rather than the volume of his theoretical knowledge without practical orientation that makes the difference in agricultural pursuits.

The nature of agricultural economics is unique because of the important role that nature plays in its working. In no other economics phenomenon as in agriculture is the nature do directly and strongly involved.  The problems of agricultural production are, therefore, multi-dimensional and the subject of agricultural economics has to develop in the light of these problems that it seeks to investigate and work with.

Features Agricultural Economies

There are substantial differences in the natural conditions under which production must be carried on and in the sociology background in the agricultural sector which demands a separately study of agricultural economics.

1. Agriculture is a unique industry in which the modes of life and business enterprise are combined together. This combination no longer exists in present -day industry. It is on this score that it more influenced by sociology,political and sentimental consideration.

2. Another characteristic of agricultural production which distinguishes it from industrial production is that the farmer produces chiefly for his own. No denying the fact that in modern farming, the element of self-sufficiency has been reduced in importance but by no means has it been removed. In most under developed countries, even today farming is done on the basis of self-sufficiency.

3. Many agricultural commodities are joint products like wheat and affairs or mutton and wool because they are both part of tne same plant or the same animal. The costs attributable to the various products cannot be separated as they often can be in industry even when several products are produced in the same plant. Thus in agriculture, it is rarely justified to consider the supply of any product in isolation.

4. Agriculture requires a far larger proportion of land in relation to its employment of other factors that does industry. This is responsible for an early tendency of law of diminishing returns wide scatter of production and the great importance of system of land tenure.

5. Farming mostly is undertaken in small sized units and thereby gives little scope for division of labour. Thus, Large scale organization and its befits,typical of industry is less applicable to agriculture.

6. Unlike in the manufacturing industry combinations are not possible in farming due to the existence of large number of small farm holdings. This results in acute completion among the farmer.

CONTRIBUTION OF AGRICULTURE IN INDIAN ECONOMY :

Agriculture is the backbone of Indian economy. Agriculture is the most important occupation for most of the Indian families.

In India, agriculture contributes about 16% of total GDP and 10% of total exports.That is the reason India secured second position worldwide in terms of farm output. 

About 75% people are living in rural areas and are still depended on agriculture.

About 43% of India's geographical area is used for agricultural activity.

AGRICULTURE IN INDIA:

*Total geographical area 328 million hectares

*Net area sown 142 million hectares

*Net irrigated area 56.9 million hectares

*Produces 51 major crops.

*Provides food to more than 1 billion people

*Produces 51 major crops.

*Contributes to 1/6th of the export earnings.

India in world of Agriculture

Largest producer of Milk, Cashew Nuts, Coconuts, Tea, Ginger, Turmeric and Black Pepper

Largest Cattle Population-281 million

Second Largest producer of Wheat, Rice. Sugar and Groundnut and pulses

Third Largest population of Tobacco

Third largest in implementation of Mechanization

ROLE OF AGRICULTURE IN INDIAN ECONOMY

1 Share in National Income : Although the share of agriculture in the total national income has been gradually decreasing on account of the development of secondary and tertiary sectors, it still contributed 59% in 1950-51. 18% in 2006-07 and 15.4% in 2016-17

2. Source of Employment : In India agriculture is the main source of employment. Even in 2018,41.61%of the total labour force in India is engaged in agriculture and depend on it for their livelihood. In 1950-51.69.5% of the total labour force of India in engaged in agriculture which was declined over a period of time.

3. Provision of Food Grains : Agriculture in India has played an important role in meeting the almost the entire food needs of the people.The production of food grains in India has increased from 5 1l million tonnes in 1950-51 to 208.3 million tonnes in 2005-06 and to 275.7 million tonnes in 2016-17.This has enabled the country to overcome the production of food grain shortages. The country almost self- sufficient in food grains and no longer depends on import of food grains

4. Supply on Raw materials to Industrial sector:- Many industries like cotton industry, sugar industries, jute industries etc. depends on agriculture for their requirements.Moreover, workers engaged in various industries depend on agriculture for the food requirement.

5. Market For Industrial Product: Agriculture provides markets for large number of industrial products. Since about two thirds of India lives in rural areas, there is a large rural purchasing power which has created a large demand for all type of industrial product.Green revolution has considerably increase the purchasing power of the large farmers in the recent years.

6. Earner of Foreign Exchange : Though exports of agricultural commodities like tea, coffee, jute, fruits, vegetables, spices, sugar, oil etc. in the past export of agricultural products accounted for about 70% of export earning of country.

Top 10 Agricultural exports and imports

Exports                                     Imports

a)Milled Rice              Leguminous Vegetables Raw Silk

b)Coffee                                          Raw Silk

c)Wheat                                          Dried Peas

d)Tea                                                Cotton

e)Cotton                                           Cashew Nuts

g)Castor Oil                                      Soya Bean Oil

h)Frozen Beef                                  Palm Oil

i)Soya Bean Meal                          Vegetable Fats and Oil

j)Millages from locust bean           Raw a sugar cane

a-c Imported from China, USA, Europe ,Argentina, Asean, Brazil

d-j Exported to Asean,China, Europe, S. Arabia,UAE, USA

7. Significance for trade and transport : Various means of transport like roadways and railways get bulk of their business from the movement of agriculture commodities and raw materials.

8. Source of Reverse for the Government : Through the direct contribution of agricultural taxes to the central and state governments in not significant,they get a significant part of their total reverse in terms of land revenue, irrigation charges, taxes imposed on the commodities purchased by the cultivators etc.Central government also earns revenue from exports duties.

9. Development of Industries: Agriculture has an important contribution to the growth of Industrial sector in a variety of ways :-

a) Increased Agro based industries get raw materials like Jute, Rubber, Cotton,sugar, Coffee, Tobacco etc. from agricultural sector.

b) Direct increase in the demand of specific industries: Tractors, Agricultural tools and implements, fertilizers and pesticides industries as directly dependent on agriculture as they supply their products to their particular sector.

10. Creation of Infrastructure :-The development of agriculture requires roads market yards, storage, transportation railways, postal services and many others for an infrastructure creating demand for industrial products and the development of the commercial sector.

11.Helpful to reduce Inequality : In a country which is predominately agricultural and over populated, there is greater inequality of income between the rural and urban areas of the country. To reduce this inequality of income, it is necessary to accord higher priority to agriculture. The prosperity of agriculture would raise the income of the majority of the rural population and thus the disparity in income may be reduced to a certain extent.

12. Helpful in phasing out economic Depression : During depression, industrial production can be stopped on reduced but agricultural production continues as it produces basic necessities of life. Thus it continues to create effective demand even during adverse conditions of the economy.

13. Improving Rural Welfare : It is the time that rural economy depends on agriculture and allied occupations in an underdeveloped country. The rising agricultural surplus caused by increasing agricultural production and productivity tends to improve social welfare in rural masses rises and they start consuming nutritious diet including eggs, milk, ghee and fruits.

14. Source of Capital Formation : Large part of Indian Capital is invested in agriculture. From the point of view of fixed assets, farm - lands occupy the highest place.

a) Capital worth million of rupees is lying invested in the form of means of irrigation,cattle agricultural implements, tractors, canals etc.

b) There is a much disguised labour in agriculture. If these persons are engaged in construction projects like construction of roads, building etc.