Nature & Scope of Agricultural Economics

Nature and scope of agricultural production economics

The nature of agricultural economics is such that it obtains most of the principles from general economics, thus there is no basic difference between general and agricultural economics. Thus the need to separate these two is that agricultural economics does not imply direct application of the principles but before application they are modified so that their postulates totally tally with the situations. These modifications are so large and varied that there is a complete justification for studying it as a separate branch of knowledge.

Terminology
Microeconomics
Macroeconomics
Static economics
Dynamic economics
Resources
Wants
Profit
Utility
Consumption economics
production economics
Production function
Marginal product
Total product
Average product
Elasticity of production




Nature of agricultural economics:
Micro as well as Macro
When the subject of study is individual farmer then it is micro-economics and when we study agricultural economy as a whole then it is called macro-econoimcs

Static as well as Dynamic
The basic difference between the two is that in former , time variable is not taken into account while the latter analysis deals with a period of time. In the present day dynamic concept is gaining momentum.

Applied science or Pure science
Agriculturist economics such as Frosten and Leoger have classified it as an applied science as it is concerned with the identification, description and classification of economic problems of agriculture. Thus, agricultural economics is concerned with the evolving of appropriate principles that govern the amount of land, labour, and capital that the farmer should use to maximize his profit and using the factors efficiently.

Science or Art
Agriculture is the science and art of cultivation of crops and raising the livestock and is not only a mode of livelihood but also a way of life. Agricultural production economics is a science because it relies on the principles and verifications of the data. It is an art because it deals with the various ways of application of the principles and to suit the conditions.









Scope of agricultural economics:
Agriculture sector is considered to be the most important in Indian scenario. The scope of agricultural production economics includes production, distribution, consumption and government activities in relation to agriculture and farm enterprises. To be more specific, the scope of agricultural economics can also be analysed on the political aspect. Self sufficiency in food produce can reduce foreign dependence fro food supply and raw materials , specially in times of crisis. There is a large scope of agri. economics in various factors of production also viz. land, labour, capital, organization etc.
The scope of agricultural production economics as quoted by Taylor “ Agricultural economics deals with the principles which underline the farmers’ problems of what to produce and how to produce what to sell and how to sell in order to secure the largest net profit for himself consistent with the best interest of the society as a whole. ”

Principles applied in Agricultural Production Economics

1. Law of equi-marginal return
2. Law of diminishing return
3. Law of opportunity cost
4. Law of substitution
5. Law of comparative advantage
6. Principle of combining enterprises
7. Cost concepts and principles