WELCOME TO MY CLASS
Mossat Anamika Nasrin, PhD
Assistant Professor
College of Agricultural Sciences
International University of Business Agriculture and Technology
(IUBAT)
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CHAPTER 1:INTRODUCTION
OUTLINE OF THE CHAPTER
❏ Basic concepts of Economics
Economics
Branches of Economics
Agricultural Economics
Characteristics of Agricultural Economics
Scope of Agricultural Economics
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[Link]
finite quantity of resources
o Inability to satisfy all our wants is called scarcity.
o people’s wants are greater than the resources available to satisfy those wants
[Link]- is something which is necessary.
-It is necessary for survival .Like air, food, cloth, house, money
[Link]- Desire to get something.
-Things that we desire to have.
-Not necessary for survival-cars, expensive clothes, more money
Problem? Wants are unlimited but resources are limited
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Economics
• Economics-comes from Greek word “OIKONOMIA”
• Oikonomia=Oikos (House) + Nomos (Custom or Law)
• Economics is a social science that examine how people use
limited resources to satisfy their unlimited wants.
• Economics is a social science that deals with the
production, distribution, and consumption of goods and
services.
● The father of economics –Adam Smith born in 1723
● Simply, Economics is the science of wealth.
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Economics (Cont.)
● According to Aristotle- “Economics is the study of home
management.
▪ Alfred Marshall: “Economics is a study of mankind in the
ordinary business of life
▪ It examines how a person gets his income and how he invests it.
▪ Thus, on one side, it is a study of wealth.
➢ Modern economists define economics as the science of growth and efficiency
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Branches of Economics
Economics
Microeconomics Macroeconomics
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• Microeconomics is the economic actions of individuals,
firms and groups of individuals and firms in the economy.
• Microeconomics helps to decide how much to spend and
on what.
• e.g., households need to choose how to allocate their
incomes between savings and expenditure.
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• Macroeconomics is the economic actions of large
aggregate
• Such as total employment, national income, GDP, GNP,
general price level of the economy, etc.
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Agricultural Economics
● Agricultural Economics is an applied field of economics concerned
with the application of economic theory in optimizing the
production and distribution of food .
● Agricultural Economics influences food policy, agricultural policy,
and environmental policy.
● Simply Agricultural Economics is the application of principles of
economics in the field of agriculture.
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➢ Agricultural Economics is a specialization within the
discipline of agricultural sciences, which studies the area
of economics of agricultural production.
★ Agricultural economics is an applied social science that
deals with how producers, consumers, and societies use
scarce and natural resources in the production, processing,
marketing, and consumption of food and fiber products.
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Agricultural Economics covers the following discipline:
• Farm management and production economics;
• Rural finance and institutions;
• Agricultural marketing and prices;
• Agricultural policy and development;
• Food and nutrition economics; and
• Sustainable resource economics
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The problem of the scarcity has the vital importance in agriculture
economics too because
➔ Land is limited and it is impossible to increase land with the
help of human efforts.
➔ Keeping this fact in mind, the land should be utilized in such a
way that we obtain the maximum production from it that
result in the satisfaction of human being.
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Characteristics of Agricultural Economics
a) Land distribution system:-
➔ Agricultural development depends on the proper land arrangement.
➔ The optimum size of land and fertile and plain lands are facilitated
for agricultural production.
➔ To ensure the modern cultivation of land in the developing and
underdeveloped countries,
➔ the agricultural economist suggest for removing the unequal and un
expected land distribution system.
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b) Supply of Consumer’s Goods:-
➔ Agricultural production is considered as the primary phase
of consumer’s goods supply in the society.
➔ The production activities of consumer’s goods are discussed
in agricultural economics.
c) Supply of industrial inputs:-
➔ Agriculture supplies raw materials to industry.
➔ Production, distribution and marketing of industrial inputs
are discussed in agricultural economics.
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d) Labour employment:-
➔ The economy of the developing countries is basically based on
agriculture.
➔ Agricultural sectors have huge opportunity to absorb the illiterate and
inefficient labour.
➔ In this case, the more labour can be employed by using small capital,
that means labour – capital ratio is very low.
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e) Primary stage of economic development:-
➔ Economic development means a positive change in
quantitative and qualitative of standard of living being.
➔ Agriculture is considered as a primary sector to make the
economy healthy in its owned.
➔ Otherwise, the base of industry cannot be strong.
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f) Capital formation:-
➔ Agriculture is considered is a primary foundation of economic
development in agricultural economics.
➔ So the foreign currency is earned by exporting agricultural products,
which is helpful for capital formation and encourages the investors to
the large-scale investment in the agriculture
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G) Existence of middlemen:-
➔ Existence of different middlemen and broker is found in the
marketing of agricultural commodities.
➔ Farmers are deprived to have fair price for their commodities.
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• Scope of Agricultural Economics
The scope of agricultural economics is extended to the
following:
1. Economics of Agricultural Production:
In Agricultural Economics, we study about the agricultural
produce. In this respect we study the following:
• What are the resources of farms.
• Whether their sizes are economic or non economic
• Whether farmers produce for themselves or for market.
• Whether the farmers are risk-takers or risk-averse.
Agricultural Economics study the economics of land
protection.
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Scope of Agricultural Economics…Cont.
2. Problems of Agri. Sector and Remedial Measures:
● In agricultural economics, we study in detail the problems in the
various areas of agriculture sector like
➔ why the per acre production of the crop is low,
➔ why the share of forest is declining;
➔ why fisheries is contributing low to GDP;
➔ what are the problems of livestock, etc.
Moreover, suggest remedial measures for the various problems of the
agriculture sector in order to
➔ Increase the agriculture production
➔ Increase its contribution to GDP
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Scope of Agricultural Economics…Cont.
3. Agricultural Credit:
➢ In case of developing countries the farmers are mostly poor.
➢ They are in need of finance both for consumption and
production.
➢ Therefore, in agricultural economics, we study agri. loans, their
nature, their use, their need, their sources and their proper
utilization, etc.
➢ Agricultural credit refers to one of several credit used
to finance agricultural transactions.
➢ agricultural credit is specially adapted to the specific financial
needs of farmers
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4. Agricultural Marketing:
In agricultural economics,
➔ we study the kinds of markets,
➔ the prevailing methods of sell in agriculture markets,
➔ the functions of agricultural market
➔ problems of agricultural marketing,
➔ the standardization of agril. products.
➔ Moreover, we also study the role of cooperatives and govt.
to deal with the problems of agril. market.
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Scope of Agricultural Economics…Cont.
5. Demand, Supply and Prices of Agricultural Goods:
➔ In agricultural economics, we analyze the demand for,
supply of and prices of agril. goods.
➔ In other words, all the economic concepts of economic
theory like demand, supply, price, elasticity of demand,
elasticity of supply, price control, support prices and
subsidies will applicable in case of agricultural economics.
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Scope of Agricultural Economics…Cont.
6. Agricultural Policies and Programmes:
❏ There exists a greater uncertainty in agril. sector as there are
big fluctuations in the output and prices of agril. products.
❏ This badly affects the poor peasants and small farmers. In
such state of affairs govt. decide policies regarding farms.
❏ As the government set minimum procurement prices for
agril. products.
❏ The government also purchase agricultural goods.
❏ The farmers are provided with subsidies.
❏ The seeds, fertilizer and irrigation are provided at lower
prices.
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Scope of Agricultural Economics…Cont.
7. Tax on farm Production:
➢ Govt. desire is getting something from farmers in the
form of taxes
➢ The rises in price of agril. goods had lead to
increase the incomes of the big farmers.
➢ Therefore, the big farmers are required to pay some
taxes.
➢ Thus, in agricultural economics we study agril. taxes
and their effects on farm productivity.
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Scope of Agricultural Economics…Cont.
8. Agriculture and world trade:
➔ World trade plays a crucial role in delivering food and
clothing to consumers worldwide.
➢ Food is basic requirement of human being but the climatic
conditions of the world do not remain alike.
➢ Sometime there is drought while on the other occasions, there
may be floods.
➢ In such situations, the agril. sector in so many countries fails
to meet the requirements of rising population.
➢ Accordingly, Agril. Economics concerned with the food and
other agril. products are obtained from other countries.
These like issues are discussed in agricultural economics.
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9. Rural & Agricultural Development:
➔ The last part of agricultural economics is concerned with the
problems of life in rural area which will have a direct and
positive effect on the agricultural development in developing
country like Bangladesh.
➔ Farming is the fabric of rural society and, in many countries
of the world, it is the main economic activity.
➔ Rural development policies should exploit the contribution
of farming, both in terms of improving on-farm activities and
supporting subsidiary services, to secure
sustainable development for rural areas.
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THANK YOU ALL
FOR YOUR
ATTENTION
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