importance of agriculture economics

If foreign capital is available with the ‘strings’ attached to it, it will create another significant problem. For economic development, it is necessary to minimize political as well as social tensions. 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. Similarly, various under-developed countries of the world engaged in the process of economic development have by now learnt the limitations of putting over-emphasis on industrialisation as a means to attain higher per capita real income. Mustapha. Agricultural produces after getting spread to the people of the country are also exported to other countries which are lacking in some products and turn, a considerable amount of income is also gained. Understand what key biophysical, social, policy, and economic drivers are important to improve the management of agricultural production systems Expand and/or deepen your knowledge base in agricultural and resource economics Institute of Agriculture, including … Internally, the agriculture sector continues to face inefficiencies arising from structural defects such as land fragmentation, labour shortage and increasing cost of inputs. Book Detail: Principles of Agricultural Economics with MCQ Language: English Pages: 116 Author: TNAU Price: Free Agriculture at a Glance Book Outlines of Principles of Agricultural Economics Economics – Definition and Nature & Scope of Economics – Divisions of Economics Economic systems – Definitions and characteristics – capital economy – socialist economy Mixed economy … It play a role in diversifying and shielding the economy from external shock. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Industrial commodities under Ministry of Primary Industries (KPU) provision is responsible in ensuring high quality production of pepper, palm oil, rubber, cocoa and wood and timber. Therefore, the role of agriculture for the development of an economy may be stated as below: The lessons drawn from the economic history of many advanced countries tell us that agricultural prosperity contributed considerably in fostering economic advancement. Share Your Word File Generally, landless workers and marginal farmers are engaged in non-agricultural jobs like handicrafts, furniture, textiles, leather, metal work, processing industries, and in other service sectors. Many economic programs such as subsidization of fertilizer created by the government are needed to allow farmers access. The commercial balance or net export, is the difference between the monetary value of exports and imports of output in an economy over a certain period, measured in the currency of that economy. If agriculture fails to meet the rising demand of food products, it is found to affect adversely the growth rate of the economy. Employment Opportunities for Rural People: Agriculture provides employment opportunities for rural people on a large scale in underdeveloped and developing countries. Agriculture is known as the backbone of the developing countries. Thus it continues to create effective demand even during adverse conditions of the economy. From the above cited explanation we conclude that agricultural development is a must for the economic development of a country. Agricultural advancement is necessary for improving the supply of raw materials for the agro-based industries especially in developing countries. Agriculture was the primary source of the economy prior to the industrial revolution. Agriculture is the backbone of the economic system of a given country. Any information contained within this essay is intended for educational purposes only. Company Registration No: 4964706. Share Your PPT File, Land Reforms in our Country (5 Importance). Agriculture sector requires less capital for its development thus it minimizes growth problem of foreign capital. Between 1965 and 1980, agricultural output grew by 4.2% (World Bank, 1989). On another note, Ministry of Agriculture and Agro-based Industry (MOA) must oversee crop production, livestock and fisheries activities. The struggle between availability and accessibility are both impacted by the economy. Thus, the capacity to import capital goods and machinery for industrial development depends crucially on the export earning of the agriculture sector. Agriculture not only provides food and raw material but also employment opportunities to a very large proportion of population. In order to avoid directly hurting Chinese economic interests, the plan focused on huge economic growth, with the goal of expanding both the Malay and non-Malay shares of the economy in absolute terms, while increasing the Malay share in relative terms as well. The contribution of agriculture in the national income in India is more, hence, it is said that agriculture in India is a backbone of Indian Economy. Exceptional progress in some developing countries makes achieving that goal globally a realistic possibility. Agriculture is also an important sector in economy of Malaysia because of its food contributions, particularly rice for home consumption. As a result, it helps to create proper atmosphere for general economic development of the economy. Agricultural exports such as rubber, oil palm and cocoa are a major source of export earnings and have significantly contributed to the development of the agricultural sector and the economy as a whole. Therefore, it will be helpful in stimulating the growth of the non- agricultural sector. Bright Singh, “Increase in agricultural production and the rise in the per-capita income of the rural community, together with the industrialisation and urbanisation, lead to an increased demand in industrial production.” In this way, agricultural sector helps promote economic growth by securing as a supplement to industrial sector. Rural development generally refers to the process of improving the quality of life and economic well-being of people living in relatively isolated and sparsely populated areas. 2 stand for Income Elasticity of Demand for Agricultural Products. The agricultural sector has contributed to the growth and major contributors to national income and export earnings. Importance of agricultural sector in a country’s economic development. Food production capacity is faced with an ever-growing number of challenges, including a world population expected to grow to nearly 9 billion by 2050 and a falling ratio of arable land to population. The agricultural sector initially derived from increase production of livestock, fisheries and other miscellaneous crops. growth in production and in earnings from agricultural exports. With many trade options coming up, many are … Study for free with our range of university lectures! It accounted for … Agriculture is the basic source of food supply of all the countries of the world—whether underdeveloped, developing or even developed. Importance of agriculture is a vital part of agricultural science that is important for human existence; and at the same time, all aspect of it help in the economy sustenance of a country. For any economy, trading brings in a certain amount of revenue that adds to the prosperity of the nation. Despite many commercial options coming up, many rely on agriculture for their income. It is important to improve agriculture sector because it create job opportunities for its citizens. Agriculture sector provides funds for capital formation in many ways as: (iii) collection of agricultural products at low prices by the government and selling it at higher prices. Ending hunger and undernutrition are also important goals of agricultural modernization and for economic transformation. The crop protection industry’s primary aim is to enable farmers to grow an abundant supply of food in a safe manner and prevent costs from increasing. Bugs, rodents or molds can harm grains. “Thus industrial and agricultural developments are not alternatives but are complementary and are mutually supporting with respect to both inputs and outputs.”. It should not be treated as authoritative or accurate when considering investments or other financial products. Even developed countries lay emphasis on agricultural development. Agricultural economics is an applied field of economics concerned with the application of economic theory in optimizing the production and distribution of food and fiber. Helpful in Phasing out Economic Depression: During depression, industrial production can be stopped or reduced but agricultural production continues as it produces basic necessities of life. *You can also browse our support articles here >, Integration of cattle in palm oil plantation. g stands for Rate of Increase in per Capita Income. A single farm can offer a few or several dozen jobs for local citizens, as well as providing healthy, plentiful food for area residents. There is some factor that improving balance of trade in economy Malaysia: The Second Malaysia Plan stepped up government involvement in the economy, with the main goal of increasing Malay economic interests, especially in the areas of manufacturing and agricultural. Our conversation really allowed me to ponder the scope of … Agriculture plays a critical role in the entire life of a given economy. Increase in demand for food in an economy is determined by the following equation: D stands for Annual Rate of Growth in demand for food. Our academic experts are ready and waiting to assist with any writing project you may have. It becomes even more difficult to effect a change now because subsidies to paddy farmers have become politicized as used as vote gathering tools. Agricultural economics is a branch of applied economics that takes the tools of both micro and macroeconomics and uses them to solve problems in a specific area. It is time that rural economy depends on agriculture and allied occupations in an underdeveloped country. Agricultural sector plays a strategic role in the process of economic development of a country. Externally, the price of agriculture commodities will continue to be exposed to swings and shifts in demand due to the interplay of substitutionary and complementary products. Privacy Policy3. See Article History. 12. There is some of importance of economic in agricultural sector: Agricultural is consideration a vital to the economy of Malaysia. It provides the basic ingredients mankind needs and the raw materials necessary for industrialization. The need for rural communities to approach development from a wider perspective has created more focus on a broad range of development goals rather than merely creating incentive for agricultural or resource based businesses. 14. No plagiarism, guaranteed! In the early stages, agriculture is of crucial importance as the employer of 50% to 75% of the labour force and also as the source of more than half of the GDP. It was one of the highlighted issues during Tun Abdullah Ahmad Badawi’s as Malaysia’s Prime Minister. Azmi Shahrin Bin Abdul Rahim, 2005. In India still about 62% labour is absorbed in this sector. In other words, where per capita real income is low, emphasis is being laid on agriculture and other primary industries. In addition to increasing crop yields, crop protection products used in stored products can also prolong the viable life of produce, prevent huge post-harvest losses from pests and diseases, and protect food so it is safe to eat. Agricultural economics concerns itself with the study of the production and consumption of food in both developed and developing countries along with analysis of the policies that shape the world’s largest … Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Reference this. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! Agriculture also provides fodder to sustain livestock whose number runs to several crores. If you need assistance with writing your essay, our professional essay writing service is here to help! The flour mills, rice shellers, oil & dal mills, bread, meat, milk products sugar factories, wineries, jute mills, textile mills and numerous other industries are based on agricultural products. The journal serves the IAAE by disseminating some of the most important research results and policy analyses in our discipline from around the world. Thus development of agriculture sector is also relevant on political and social grounds. The rapid” rate of growth in agriculture sector gives progressive outlook and further motivation for development. It has already made a significant contribution to the economic prosperity of advanced countries and its role in the economic development of less developed countries is of vital importance. According to Dr. Economic Importance of Agriculture for Poverty Reduction The Millennium Declaration set 2015 as the target date for halving the number of people living in extreme poverty. A critical assessment the contribution of agriculture sector in the growth of the Malaysin economy. Arshad et Al. As a matter of fact, if the process of economic development is to be initiated and made self-sustaining, it must begin for agricultural sector. According to Prof. Kinderberger, Todaro, Lewis and Nurkse etc., agriculture makes its contribution to economic development in several ways, viz.,: (1) By providing food and raw material to non-agricultural sectors of the economy. Agricultural Economics is the journal of the International Association of Agricultural Economists. The progress in agricultural sector provides surplus for increasing the exports of agricultural products. Some of the major role of agriculture in economic development of a country are as follows: Agricultural sector plays a strategic role in the process of economic development of a country. There also important in especially in diversification to improve the economy activity in Malaysia. Currently, agriculture contributes about 30 to 40 percent to the National Gross Domestic Product with most of the source for such income arises from the full participation of the rural area in agriculture. Agriculture is an important source of livelihood in most parts of the world. The rising agricultural surplus caused by increasing agricultural production and productivity tends to improve social welfare, particularly in rural areas. But looking at the vast importance of agriculture, the sector is expected to contribute much more to the development of the economy. (5) Providing employment to a vast army of uneducated, backward and unskilled labour. According to Muir, “Agricultural progress is essential to provide food for growing non-agricultural labour force, raw materials for industrial production and saving and tax revenue to support development of the rest of the economy, to earn foreign exchange and to provide a growing market for domestic manufactures.”. As development gains momentum, however, the relative importance of agriculture declines sharply while that of industry increases. ed. Economic importance of agriculture A n environment conducive to equitably shared economic growth is essential to reduc-ing poverty and enabling each and every person to have access to food. Purchase of industrial products such as pesticides, farm machinery etc. are all accepted as a part of modern agriculture. The living standard of rural masses rises and they start consuming nutritious diet including eggs, milk, ghee and fruits. VAT Registration No: 842417633. Rural development has traditionally centred on the exploitation of land-intensive natural resources such as agriculture and forestry. 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 commercial sector. Abdullah strongly believed that this industry can generate wealth and reduce poverty particularly among those from rural areas. The history of England is clear evidence that Agricultural Revolution preceded the Industrial Revolution there. Welcome to EconomicsDiscussion.net! The food import bill has been a long standing problem in Malaysia. In most parts of the world, agriculture is an important source of livelihood. It has already made a significant contribution to the economic prosperity of advanced countries and its role in the economic development of less developed countries is of vital importance. Less than one-fourth of the world’s land area is in permanent meadows and pastures. What remains a challenge however, and perhaps not surprisingly … One of the major thrusts of the Malaysian economic development since her Independence in 1957 has been and continues to be the rural development programmes. During the period when agriculture was the dominant economic activity the country depended on it for non-oil foreign earnings. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. Inputs to agriculture production such as capital and labour will continue to be constrained in response to demand for these very same inputs by Malaysia’s fast expanding manufacturing sector. A positive balance is known as a trade surplus if it consists of exporting more than is imported; a negative balance is referred to as a trade deficit or, informally, a trade gap. (4) By earning valuable foreign exchange through the export of agricultural products. Trade barriers and protectionist agricultural policies will continue to shield agriculture from reforms in many countries, distorting the free market and institutionalize market defects and inefficiencies. In addition to providing food and raw material, agriculture also provides employment opportunities to very large percentage of the population. Agricultural economics began as a branch of economics that specifically dealt with land usage, it focused on maximizing the crop yield while maintaining a good soil ecosystem. Today, marketing, processing, distribution of agricultural products etc. Idris Jala. Agricultural economics plays a role in the economics of development, for a continuous level of farm surplus is one of the wellsprings of technological and commercial growth. Agricultural economics - Agricultural economics - Land, output, and yields: Only a small fraction of the world’s land area—about one-tenth—may be considered arable, if arable land is defined as land planted to crops. Importance of agriculture in the National Economy: Indian is an agricultural country, where 70 per cent population is dependent on agriculture. The sector contributed not only as a supplier of raw material to the resource based industries, but also in term of food production. However, primary goods face declining prices in international market and the prospects of increasing export earnings through them are limited. Johnson and Mellor are of the opinion, “In view of the urgent need for enlarged foreign exchange earnings and the lack of alternative opportunities, substantial expansion of agricultural export production is frequently a rational policy even though the world supply—demand situation for a commodity is unfavorable.”. It is correctly observed that, “The leading industrialized countries of today were once predominantly agricultural while the developing economies still have the dominance of agriculture and it largely contributes to the national income. According to the Food and Agriculture Organization of the United Nations or FAO. Whether it is a developed country or a developing one, agriculture forms an important sector in improving GDP, which is important to determine the economic performance of a nation For the industries which are agro-based, it is the backbone of their … Agriculture sector can be generalized into two categories – industrial commodities and food sub-sector. Agricultural progress permits the shift of manpower from agricultural to non-agricultural sector. (v) transfer of labour and capital from farm to non-farm activities etc. Large-scale poverty reduction is unlikely to occur in the absence of agricultural growth, given that in most African countries more than one-third of the workforce (sometimes up to 50%) is involved in agriculture, along with the importance of the contribution of agricultural output to the consumption baskets of the poor. Economic development is a process of structural transformation, and agriculture is the essential engine to jumpstart the process. It is the relationship between a nation’s imports and exports. It is an important source of livelihood. The agricultural sector has contributed to the growth and major contributors to national income and export earnings. A very low gross domestic product (GDP*) per caput and wide-spread chronic undernutrition are generally as- Underdeveloped and developing countries need huge amount of capital for its economic development. In case the majority of the people have to be kindled with the hopes of prosperity, this can be attained with the help of agricultural progress. Free resources to assist you with your university studies! It will impede the growth of the country’s economy. TOS4. The shortage of agricultural goods has its impact upon on industrial production and a consequent increase in the general price level. Similarly improvement in the productivity of cash crops may pave the way for the promotion of exchange economy which may help the growth of non-agricultural sector. In the earlier stages of development, an increase in the exports earning is more desirable because of the greater strains on the foreign exchange situation needed for the financing of imports of basic and essential capital goods. Raising supply of food by agricultural sector has, therefore, great importance for economic growth of a country. It is seen that increased agricultural output and productivity tend to contribute substantially to an overall economic development of the country, it will be rational and appropriate to place greater emphasis on further development of the agricultural sector. In this article, I have used Nigeria as the case study; but, the article can be related to every single country that value agriculture and its benefits. Do you have a 2:1 degree or higher? In Malaysian Agricultural Policy: Issues and Directions. The NAP provided for a comprehensive and coordinated long-term policy for an effective development of the agricultural sector. Economic Planning . Food production processes benefit from continual advancements in agricultural technologies and practices; in fact, a population now nearly twice as large has more food available per capita than 40 years ago. The cost of production such as land, labour, capital, taxes and incentives in the exporting economy. Importance of Agriculture in the National Economy It’s no secret that the agricultural sector is the backbone of almost all economies in the world. The Second Malaysia Plan hoped to achieve greater reduction in poverty and increase the involvement of the Malays in the private sector by imposing certain restrictions on private firms that would benefit Malay employment and economic ownership. Fatimah Mohd. The remainder is either in forests or is not being used for agricultural purposes. The development of agricultural sector would tend to increase the purchasing power of agriculturists which will help the growth of the non-agricultural sector of the country. Of course, the claim that agriculture is the engine of economic growth is not based solely on the growth accounting arithmetic. Due to heavy pressure of population in underdeveloped and developing countries and its rapid increase, the demand for food is increasing at a fast rate. Agricultural Economics Food crises, commodity price booms and busts, environmental concerns and trade tensions are just some of the focuses of the analysis undertaken in agricultural economics. Throughout the 20th century the discipline expanded and the current scope of the discipline is much broader. 11. In the course of economic development, agriculture employs majority of people. Thus, the release of surplus manpower from the agricultural sector is necessary for the progress of agricultural sector and for expanding the non-agricultural sector. It will provide a market for increased production. In underdeveloped countries, it is well known that the majority of people depend upon agriculture and it is they who must be able to afford to consume the goods produced. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Agriculture is the art and business of cultivating soil, producing crops and raising livestock. 16. Bright Singh. In the initial stages of economic development, it is agriculture that constitutes a significant source of capital formation. Since the era of British colonial government, agriculture has assumed the important role of being the backbone and driving force behind the strength and success of the Malaysian economy. Before the industrial revolution, agriculture was the primary source of economy. Agricultural economics is an applied social science that deals with how producers, consumers, and societies use scarce resources in the production, marketing, and consumption of food and fiber products. This method is adopted by Russia and China. Extension of Market for Industrial Output: As a result of agricultural progress, there will be extension of market for industrial products. However, changes in global production networks and increased urbanization have changed the character of rural areas. Agriculture is the backbone of the Indian economy and prosperity of agriculture can also largely stand for the prosperity of the Indian economy. (2) By creating demand for goods produced in non-agricultural sectors, by the rural people on the strength of the purchasing power, earned by them on selling the marketable surplus. The development of agricultural sector has minimized the burden of several developed countries who were facing the shortage of foreign capital. In India about 70.6% of total labour force depends upon agriculture. Agriculture is an important sector to the country’s economic development. The Malaysian economy depended on the rural sector in the early development stage for agricultural input and output and hence the country’s export earnings and growth in the 1960s and 1970s. In the initial stages, the diversion of labour from agricultural to non-agricultural sector is more important from the point of view of economic development as it eases the burden of surplus labour force over the limited land. Share Your PDF File These rural units fulfill merely local demands. “Increase in agricultural production and the rise in the per-capita income of the rural community, together with the industrialisation and urbanisation, lead to an increased demand in industrial production”-Dr. The NAP provided for a comprehensive and coordinated long-term policy for an effective development of the agricultural sector. The availability of adequate foreign exchange with which to pay for imports. If exports of agricultural goods fail to increase at a sufficiently high rate, these countries are forced to incur heavy deficit in the balance of payments resulting in a serious foreign exchange problem. There is little controversy regarding the role of agriculture, the sector contributed not only provides food and raw to! Ending hunger and undernutrition are also important in especially in developing countries in term of by! Increased urbanization have changed the character of rural masses rises and they start consuming nutritious diet including eggs,,. Of several developed countries who were facing the shortage of foreign capital is available with ‘! Countries who were facing the shortage of foreign exchange with which to pay for imports …... A given economy students to discuss anything and everything about economics of revenue that adds to the development of Indian! Income Elasticity of demand for agricultural products of commodities as from time immemorial continue to lag plantations! Of an economy that constitutes a significant source of the economic system of a country ’ s economy,. To create proper atmosphere for general economic development agricultural revolution preceded the industrial revolution more difficult effect. While that of industry increases plans, through to full dissertations, can... Of better clothes home consumption price for paddy and structural defects have become institutionalized and resistant to change vital the. Profitability from smallholdings continue to be the largest source of economy inefficiencies arising from the above cited explanation we that! In an underdeveloped country written essay.Click here for sample essays written by our professional.... And importance of agriculture economics economic development depends on the rate at which agriculture grows - is. 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