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Hello buddy I need lecture notes of Principles of Agricultural Economics course of Acharya N G Ranga Agricultural University (ANGRAU), Hyderabad, can I get it online on university website?
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You want lecture notes of Principles of Agricultural Economics course of Acharya N G Ranga Agricultural University so I have lecture notes in pdf format. I am uploading pdf file which you can free download.
__________________ Answered By StudyChaCha Member |
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The Acharya N. G. Ranga Agricultural University (ANGRAU) (formerly Andhra Pradesh Agricultural University, APAU) was established in 1964. It has an infrastructure of nine colleges, 58 research stations, eight agricultural polytechnics, one horticultural polytechnic, one multipurpose polytechnic, 22 District Agricultural Advisory. ANGRAU Notes on Principles of Agricultural Economics Course: Lecture no.1 Economics – Meaning, Definitions, Subject matter of Economics – Traditional approach – consumption, production, exchange and distribution ECONOMICS Economics is popularly known as the “Queen of Social Sciences”. It studies economic activities of a man living in a society. Economic activities are those activities, which are concerned with the efficient use of scarce means that can satisfy the wants of man. After the basic needs viz., food, shelter and clothing have been satisfied, the priorities shift towards other wants. Human wants are unlimited, in the sense, that as soon as one want is satisfied another crops up. Most of the means of satisfying these wants are limited, because their supply is less than demand. These means have alternative uses; there emerge a problem of choice. Resources being scarce in nature ought to be utilized productively within the available means to derive maximum satisfaction. The knowledge of economics guides us in making effective decisions. The subject matter of economics is concerned with wants, efforts and satisfaction. In other words, it deals with decisions regarding the commodities and services to be produced in the economy, how to produce them most economically and how to provide for the growth of the economy. Subject matter of economics Economics has subject mater of its own . Economics tells how a man utilises his limited resources for the satisfaction of unlimited wants. Man has limited amount of time and money. He should spend time and money in such away that he derives maximum satisfaction. A man wants food, clothing and shelter. To get these things he must have money. For getting money he must make an effort. Effort leads to satisfaction. Thus, wants- efforts- satisfaction sums up the subject mater of economics initially in a primitive society where the connection between wants efforts and satisfaction is direct . Divisions of Economics The subject matter of economics can be explained under two approaches viz., Traditional approach and Modern approach. Traditional Approach It considered economics as a science of wealth and divided it into four divisions viz., consumption, production, exchange and distribution 1. Consumption: It means the use of wealth to satisfy human wants. It also means the destruction of utility or use of commodities and services to satisfy human wants. 2. Production: It is defined as the creation of utility. It involves the processes and methods employed in transformation of tangible inputs (raw materials, semi3 finished goods, or subassemblies) and intangible inputs (ideas, information, know -how) into goods or services. 3. Exchange: It implies the transfer of goods from one person to the other. It may occur among individuals or countries. The exchange of goods leads to an increase in the welfare of the individuals through creation of higher utilities for goods and services. 4. Distribution: Distribution refers to sharing of wealth that is produced among the different factors of production .It refers to personal distribution and functional distribution of income. Personal distribution relates to the forces governing the distribution of income and wealth among the various individuals of a country. Functional distribution or factor share distribution explains the share of total income received by each factor of production viz., land, labour, capital and organisation. Lecture No.2 Modern Approach – Microeconomics and macroeconomics - Methods of economic investigation – Deduction & , Induction Modern Approach : This approach divides subject matter of economics into two divisions i.e., micro economics and macro economics. The terms „micro-„ and „macro-„ economics were first coined and used by Ragnar Frisch in 1933. 1. Micro-Economics or Price Theory: The term „micro-economics‟ is derived from the Greek word „micro‟, which means small or a millionth part. It is also known as „price theory‟. It is an analysis of the behaviour of small decision-making unit, such as a firm, or an industry, or a consumer, etc. It studies only the employment in a firm or in an industry. It also studies the flow of economic resources or factors of production from the resource owners to business firms and the flow of goods and services from the business firms to households. It studies the composition of such flows and how the prices of goods and services in the flow are determined. A noteworthy feature of micro-approach is that, while conducting economic analysis on a micro basis, generally an assumption of „full employment‟ in the economy as a whole is made. On that assumption, the economic problem is mainly that of resource allocation or of theory of price. Importance of Micro-Economics: Micro-economics occupies a very important place in the study of economic theory. Functioning of free enterprise economy: It explains the functioning of a free enterprise economy. It tells us how millions of consumers and producers in an economy take decisions about the allocation of productive resources among millions of goods and services. Distribution of goods and services: It also explains how through market mechanism goods and services produced in the economy are distributed. Determination of prices: It also explains the determination of the relative prices of various products and productive services. Efficiency in consumption and production: It explains the conditions of efficiency both in consumption and production. Formulation of economic policies: It helps in the formulation of economic policies calculated to promote efficiency in production and the welfare of the masses. Limitations of Micro-Economics: Micro-economic analysis suffers from certain limitations: It does not give an idea of the functioning of the economy as a whole. It fails to analyse the aggregate employment level of the economy, aggregate demand, inflation, gross domestic product, etc. It assumes the existence of „full employment‟ in the whole economy, which is practically impossible. 2. Macro-Economics or Theory of Income and Employment: The term „macro-economics‟ is derived from the Greek word „macro‟, which means “large”. Macro-economics is an analysis of aggregates and averages pertaing to the entire economy, such as national income, gross domestic product, total employment, total output, total consumption, aggregate demand, aggregate supply, etc. Macro-economics looks to the nation's total economic activity to determine economic policy and promote economic progress. Importance of Macro-Economics: It is helpful in understanding the functioning of a complicated economic system. It also studies the functioning of global economy. With growth of globalisation and WTO regime, the study of macro-economics has become more important. It is very important in the formulation of useful economic policies for the nation to remove the problems of unemployment, inflation, rising prices and poverty. Through macro-economics, the national income can be estimated and regulated. The per capita income and the people‟s living standard are also estimated through macroeconomic study. Limitations of Macro-Economics: Individual is ignored altogether. For example, in macro-economics national saving is increased through increasing tax on consumption, which directly affects the consumer welfare. The macro-economic analysis overlooks individual differences. For instance, the general price level may be stable, but the prices of food grains may have gone up which ruin the poor. A steep rise in manufactured articles may conceal a calamitous fall in agricultural prices, while the average prices were steady. The agriculturists may be ruined. DEFINITIONS OF ECONOMICS The word economics has been derived from the Greek Word “OIKONOMICAS” with “ OIKOS” meaning a household and “ NOMOS” meaning management. Kautilya, the great Indian statesman, named his book on state crafts as „Arthashastra‟. WEALTH DEFINITION OF ECONOMICS : Adam smith defined Economics as “ An enquiry into the nature and causes of wealth of nations” in his book, entitled „ Wealth of Nations‟. He is regarded as the “Father of Economics”. Criticisms of Adam smith definition: WELFARE DEFINITION OF ECONOMICS : Alfred Marshall in his book “Principles of Economics” defined “Political Economy or Economics as a study of mankind in the ordinary business of life, it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well- being . Thus it is on the one side a study of wealth, and on the other, and more important side, a part of the study of man. Criticisms of Alfred Marshall definition: SCARCITY DEFINITION OF ECONOMICS: In his publication „Nature and Significance of Economic Science‟ Lionel Robbins formulated his conception of Economics based on the scarcity concept. “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. GROWTH DEFINITION OF ECONOMICS: John Maynard Keynes is known as the Father of Modern Economics. He defined economics as “the study of the administration of scarce resources and of the determinants of employment and income”. In the words of Nobel prize winner Prof. Samuelson, “Economics is the study of how people and society end up choosing with or without the use of money, to employ scarce productive resources that could have alternative uses, it produces various commodities over time and distributes them for consumption, now or in the future, among various persons and groups in society. It analyses costs and benefits of improving patterns of resources allocation.” Importance Economics analyses the economic problems of the society. It plays a major role in the economic development of the country by proposing the optimum allocation of resources. Knowledge of economics is useful in understanding various national and international events and trends. Amarthya Sen, Bharat Ratna recipient was awarded Nobel Prize for Economics. Methods of Economics Investigation : There are two methods of economic investigation that are used in economic theory i.e., 1) Deductive method and 2) Inductive Method 1. Deductive Method: This method involves reasoning or inference from the general to the particular or from the universal to the individuals. It is also known as the abstract, analytical, hypothetical or apriori method. Deduction involves four steps: (1) Selecting the problems (2) Formulating the assumptions (3) Formulating the hypothesis through the process of logical reasoning whereby inferences are drawn and (4) Verifying the hypothesis. 2. Inductive Method: This method is also known as Concrete method, historical method or realistic method. It involves reasoning from particulars to the general or from the individual to the universal. This method derives economic generalisations on the basis of experiments and observations. In this method detailed data are collected on certain economic phenomenon and effort is then made to arrive at certain generalizations which follow from the observations collected. Is Economics a Science or an Art Science is a systematized body of knowledge in which the facts are so arranged that they speak for themselves. Judged by this standard, economics is certainly a science. Economics is also an art because it lays down precepts or formulas to guide people to reach their goals. Economics therefore is a science as well as an art. Economics – A Social Science Economics deal with the activities of people living in an organized community or society, in such activities which relate to the earning and use of wealth or with the problems of scarcity, choice and exchange. Hence it called a social science. Positive Economics and Normative Economics: 1. Positive economics is concerned with „what is‟ whereas Normative economics is concerned with „what ought to be‟. 2. Positive economics describe economic behaviours without any value judgment while normative economics evaluate them with moral judgment. 3. Positive economics is objective while normative economics is subjective. 4. The statement, “ Price rise as demand increase” is related to positive economics, whereas the statement, “ Rising prices is a social evil” is related to normative economics. Lecture No.3 Agricultural Economics – Definitions, Meaning, Importance of Agricultural Economics – Branches of agricultural economics AGRICULTURAL ECONOMICS Introduction A study of economic principles, with emphasis on their application to the solution of farm, agribusiness, and agricultural industry problems in relationship to other sectors is known as Agricultural Economics. In other words, it applies principles of economics to issues of agricultural production, natural resources, and rural development. It mainly focuses on principles of microeconomics. Agricultural economics began in the 19th century as a way to apply economic principles and research methods to crop production and livestock management. The roots of the discipline, however, can be found in the writings of the classical economists like Adam Smith. The word, agriculture comes from the Latin word ager, referring to the soil and cultura, to its cultivation. Agriculture, in its widest sense can be defined as the cultivation and /or production of crop plants or livestock products. It is synonymous with farming: the field or field –dependent production of food, fodder and industrial organic materials. Having known the meaning of agriculture, let us know what economics is. Economics is the science that studies as to how people choose to use scarce productive resources to produce various goods and to distribute these goods to various members of society for their consumption. Now having defined agriculture and economics, we look into the field of agricultural economics. Definition Agricultural economics is an applied field of economics in which the principles of choice are applied in the use of scarce resources such as land, labour, capital and management in farming and allied activities. It deals with the principles that help the farmer in the efficient use of land, labour and capital. Its role is evident in offering practicable solutions in using scarce resources of the farmers for maximization of income. Prof. Gray has defined agricultural economics as “The science in which the principles and methods of economics are applied to the special conditions of agricultural industry” According to Prof.Hibbard, “Agricultural economics is the study of relationships arising from the wealth-getting and wealth-using activity of man in agriculture” Snodgras and Wallace defined agricultural economics as “an applied phase of social science of economics in which attention is given to all aspects of problems related to agriculture.” Importance of agricultural economics Akin to economics, the field of agricultural economics finds to seek relevance between cause and effect using the most advanced methods viz, production functions and programming models. It uses theoretical concepts of economics to provide answers to the problems of agriculture and agribusiness. Initially earnest efforts were made by the economists to use the economic theory to agricultural problems. Now the subject matters of agricultural economics is enriched in many directions and fields taking the relevant tools of sciences particularly mathematics and statistics. Agricultural depression which occurred in last quarter of 19th century and middle of 20th century brought about increased attention and concern to find out plausible cause and solutions for world agricultural depression. Here in this context the contribution made by agronomists, economists, horticulturists, etc., is noteworthy. Agriculture is the integral part of the world food system, having the foundation links between crops and animal production system. Agricultural economists here have to play a major role in understanding the intricacies involved in the foundation systems. Knowledge regarding problems in production, finance, marketing and government policies and their impact on production and distribution is very essential to find out suitable solutions for the farm problems. Students of agricultural economics are taught the subject disciplines viz., microeconomics, macroeconomics, agricultural production economics, farm management, agricultural marketing etc., to fulfill the requirements. Lecture No.4. Agricultural production economics- Meaning- Definitions- Subject matter – Objectives - Farm Management – Meaning – scope – Definitions- Objectives Agricultural production economics Agricultural production economics is a field of specialization within the subject of Agricultural Economics. It is concern with the selection of production pattern and resource use efficiency in order to optimize the objective function of farming community or the nation within a frame work of limited resources. The goals of agricultural production economics are: (1) To provide guidance to individual farmers in using their resources most efficiently and (2) To facilitate the most efficient use of resources from the stand point of economy. Definition Agricultural production economics is an applied field of science wherein the principles of choice are applied to the use of capital, labour, land and management resources in the farming industry. Subject matter Agricultural production economics involves analysis of production relationships and principles of rational decisions in order to optimize the use of farm resources on individual farms and to rationalize the use of inputs from nation‟s point of view. The primary interest is applying economic logic to problems that occur in agriculture. Agricultural production economics is concerned with the productivity of inputs. As a study of resource productivity, it deals with resource use efficiency, resource combination, resource allocation, resource management and resource administration. The subject matter of production economics involves topics like factor-product relationship, factor-factor relationship and product- product relationship, size of farm, returns to scale, credit and risk and uncertainty, etc. Objectives: 1. To determine and outline the conditions which give the optimum use of capital, labour, land and management resources in the production of crops and livestock. 2. To determine the extent to which the existing use of resources deviates from the optimum use. 3. To analyse the forces which condition existing production pattern and resource use. 4. To explain means and methods in getting from the existing use to optimum use of resources. Farm management In the context of increased accent on commercialization there is a greater need to improve the managerial abilities of the farmers. So far the managers in general have responded admirably to technological changes that occurred in Indian agriculture. But response of some of the farmers is not in line with needed direction. We can always differentiate those farmers performing against those not performing. Hence, it is of paramount importance for the farm managers to identify the changes that take place and respond suitably, for any lapse on his part does not help him to survive in the changing economy. This speaks of the need for the managers to sharpen the skills to tackle varying problems that crop up from time to time in the organization of farm business. The role of farm management, therefore, is to supply the information from the farmers for sound planning. All farm management tools are helpful to the farmers in solving their managerial problems for successful operation of the farm business. Scope Farm management is considered to fall in the field of microeconomics. It treats every farm as separate unit because of differences in the ability of resources, problems and potentiality. The main concern of farm management is the farm as a unit. Farm management deals with the allocation of inputs at the level of individual farms. The objective of farm management is to maximize returns from the farm as a whole. It is interested in the profitability along with practicability. What crops, livestock enterprises and their combination to grow, what amount of resources to be applied, how the various farm activity to be performed, etc., all these fall within the scope of farm management. Definitions Farm management is defined as the science that deals with organization and operation of the farm in the context of efficiency and continuous profits (J. N.Efferson) Farm management is defined as the art of managing a farm successfully as measured by the test of profitableness (Gray) Farm management is a branch of agricultural economics, which deals with wealth earning and wealth spending activities of farmer in relation to the organization and operation of the individual farm unit for securing maximum possible net income (Bradford and Jhonson) Objectives 1. To examine production pattern and resource use on the farm. 2. To identify the factors responsible for the present production pattern and resource use on the farm. 3. To determine the conditions of optimality in the resource use and the production pattern on the farm. 4. To analyse the extent of sub optimality in the resource use on the farm, and 5. To suggest ways and means in getting the present use of resources to optimality on the farm. Lecture No.5 Agricultural finance – Meaning – Definitions – micro vs macro finance –need for agricultural finance-Agricultural marketing – meaning, definition , importance of agricultural marketing Agricultural finance Agricultural finance generally means studying, examining and analyzing the financial aspects pertaining to farm business, which is the core sector of the country. The financial aspects include money matters relating to production of agricultural products and their disposal. According to Murray (1953), “It is an economic study of borrowing finds by farmers; of the organization and operation of farm lending agencies, and of society‟s interest in credit for agriculture.” According to Tandon and Dhandyal (1962), “as a branch of agricultural economics, which deals with the provision, and management of bank services and financial resources related to individual farm units” Micro Vs Macro finance Agricultural finance is viewed both at macro level and micro level. Macro finance deals with the different sources of raising funds for agriculture as a whole in the economy and it is also concern with the lending procedures, rules, regulations, monitoring and controlling procedures of different agricultural institutions. Thus, macro finance pertains to financial agriculture at the aggregate. Micro finance deals with financing the individual farm business units and it is concern with the study as to how the individual farmer considers various sources of credit to be borrowed from each source and how he allocates the same among the alternative uses within the farm. Need for agricultural finance Given the requirement of finance in agricultural sector, very few farmers will have capital of their own to invest in agriculture. Therefore, a need arises to provide credit to all those farmers who require it. Even if we look into the expenditure pattern of the farm families, they have hardly any savings to fall back on. Therefore, credit enables the farmers to advantageously use seeds, fertilizers, irrigation, machinery, etc. Farmer has to invariably search for a source which supplies adequate farm credit. Above all, small and marginal farmers constitute majority of the farming community. Agricultural Marketing The term, agricultural marketing implies selling of goods and services by the farmers and ranchers. It includes various functions viz., assembling, transportation, storing, buying, selling, standardization, grading, processing, sales promotion, etc. According to Thomsen, “agricultural marketing comprises all the operations, and the agencies conducting them involved in the movement of farm produced foods, raw materials and their derivatives, such as textiles, from the farms to the final consumer and effects of such operations on farmers, middlemen and consumers.” Importance of agricultural marketing Marketing gives signals to increase production and thereby ensures the availability of goods, and services. If the marketing activity is developed, demand for goods increases as a result, production of goods also increases. Due to increased production, the demand for inputs increases i.e., demand for input is derived from the increase in demand for the output. To distribute the required input to the farm sector, the input marketing has to be strengthened. Lecture No.6 Basic terms and concepts in economics – Goods & Services – free and economic goods, Utility – Cardinal and Ordinal approaches. Characteristics of utility - Forms of utility. BASIC TERMS AND CONCEPTS IN ECONOMICS GOODS and SERVICES Economics is concerned with the production and distribution of goods and services. Goods: It is defined as anything that satisfies human wants or needs. Characteristic features of goods: 1. They are tangible in nature 2. They are the material outcome of production Example: Foodgrains, Machinery, Seeds, Fertilizers etc., Services would be the performance of any duties or work for another or professional activity. . Characteristic Features of Services: 1. They are intangible 2. Non- Materialistic 3. Inseparable 4. Variable 5. Perishable Example: Services rendered by agricultural labourers, doctors, teachers etc., Classification of Goods The goods are classified based on supply, durability, consumption and transferability. 1) Based on Supply: The goods are categorized as economic goods and free goods based on the supply criteria Free goods are those goods that exist in lenty that can be used as much as we like. They are gifts of nature and used without payment Example: Air, sunshine etc. The economic goods, on the other hand, are scarce and can be had only on payment. They are limited and generally man- made and hence those can be available only on payment. In Economics, we are concerned with economic goods only. Economic goods mean wealth. Thus there would have been no science of economics if all goods had been free goods. The distinction between free goods and economic goods, of course is not permanent, for instance air is a free good but when we receive it under fan it is an economic good. 2) Based on Consumption: The Goods are categorized as Consumer goods and Producer Goods. Consumer goods are those which yield, satisfaction directly. They are used by consumer directly to satisfy the wants Example: food, clothing, etc. These goods are known as the Goods of First order. Producer goods are these goods which help us to produce other goods. They give satisfaction indirectly by producing other goods which will yield final satisfaction. Example: machinery, tools etc. They are also termed goods of the second order. .3) Based on Durability: This classification emphasized on the nature of the goods and their usage. Mono Period Goods are those goods which can be used only once in the production and consumption process. Example: Seeds, Fertilizers,food etc., Poly Period Goods are those which can be used repeatedly during the production and consumption process over several periods. Example:refrigerator machinery, implements etc., 4) Based on Transferability: External Material Transferable good. Example: Land, Buildings etc., External material non-Transferable good. Example: Degree Certificate, PAN Card etc., External non material transferable good. Example: Goodwill of a business External non material Non-transferable good. Example: Friendship,light Internal non material Non-Transferable good. Example: Intelligence Quotient ,ability ,cruelty etc., CLASSIFICATION OF GOODS GOODS SUPPLY CONSUMPTION DURABILITY TRANSFERABILITY Free Economic Consumer Producer Mono Poly External Internal Goods Goods Goods Goods Period goods Period goods Material non material Transferable Non- Transferable Non - transferable transferable goods goods goods goods UTILITY The basis of consumer behaviour is that people tend to choose those goods and services they value high. Based on this premise economists developed the notion of utility to describe the consumption patterns adopted by the consumers. Definition : Utility means the power to satisfy a human want. Any commodity or service which can satisfy a human want is said to have utility Characteristics of Utility : 1. Utility is subjective: Utility varies from person to person, for Eg:- A high yielding variety seed gives more utility to the farmer. The same seed provided to a cloth merchant gives zero utility. 2. Utility varies with purpose : For Eg:- Coconut oil is used as coking oil or hair oil or as lubricant. 3. Utility varies with time : The Intensity of a person‟s desire for a commodity is different at various time periods, for Eg:- Labour requirement for paddy is peak during transplantation harvesting and threshing period than other operations taken up in paddy cultivation. 4. Utility varies with ownership : Ownership of a good creates greater utility from a good than when it is hired Eg:- owning a tractors gives more utility than hiring it. 5. Utility need not be synonymous with pleasure: For Eg:- A sick man has to consume medicines for getting cured. He does not get pleasure during the process. 6. Utility does not mean satisfaction: utility is distinct from satisfaction. It implies potentiality of satisfaction in a given commodity. But the satisfaction is the end result of consumption. Satisfaction is what we get and the utility is the quality in agood which gives satisfaction. KINDS OR TYPES OF UTILITY The kinds or types of utilities are 1) Form utility 2) Place utility 3) Time utility and 4) Possession utility. 1. Form Utility : The Change in the form offers greater utility to the good than in its original form. For example: Contact Detail: Acharya N G Ranga Agricultural University Rajendranagar, Hyderabad-500 030, Andhra Pradesh. Map:
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