AGRICULTURAL ECONOMICS
The Three Sectors of the Economy
The economy works on three tier design. The primary sector that constitutes the
agricultural sector, fishing, farming and mining that are included in the process of
extraction. The secondary sector also known as the manufacturing sector, it includes the
process of quarrying and manufacturing the goods. Also known as the service sector, the
tertiary sector consists of activities that helps in delivering the goods produced and
manufactured with the help of primary and tertiary sector. This sector is also known as the
backbone of growth in the economy.
In order for the secondary and tertiary sector to perform effectively, it is mandatory for the
primary sector to work efficiently. The primary sector is the base for the growth of other
two sectors and the proper functioning of the economy. A decline in the performance of the
primary sector would lead to a fall in the performance of the other two sectors.
Role of Agriculture Sector in the Economy
Agriculture constitutes a major section of the primary sector. Agricultural economics
studies how the how the resources are allocated and distributed in the farming sector and
how the commodity produced is distributed among the consumers. The agricultural sector
in most of the economies provides a base for their growth and development.
1) National Income of the Economy:
In economies like India, major section of the population (especially in rural areas) is
dependent on the agriculture sector for their income. But, it doesn’t mean that the
agriculture sector holds a significant place in the national income of the economy.
DISGUISED UNEMPLOYMENT: The rural people are employed mainly in the agricultural
sector but, it is not necessary that the no. of people employed is genuinely required. People
engage in disguised employment, it occurs when a person is working somewhere for
example; in a piece of land with his family of four people but the level of output achieved
can be easily attained when only three persons work for the same time on the land. This
means that the other two members of the family are disguisedly unemployed.
But, if the people start avoiding disguised employment and start working in farms where
their work contributes in the level of output, then the agricultural sector can become the
most important sector in an economy that contributes maximum in the level of national
income.
2) Root of Supply of Food:
With the rapid increase in the population, the pressure on the Agriculture assignment help sector for the
supply of food increases. If the agriculture fails to meet the demand of the economy, then a
rise in the demand with low level of supply will lead to an increase in the price of the
economy creating an inflationary spiral in the economy. Therefore, it is very important for
the agriculture sector to increase the production to save the economy from such scenarios.
3) Source of Raw Material:
Agriculture assignment help sector is the key for the proper functioning of industries especially agro- based
industries. It supplies firms like these with raw material. A decline in the supply from
agriculture can have a drastic impact on these industries as this will hamper the production
further leading to a decrease in the supply of the products made, owing to increased
demand and less supply the prices in the economy will rise.
4) Decrease in the Rate of Unemployment:
Agriculture still uses both labor and technology in a fine ratio. Focusing more on the
Agriculture assignment help sector of an economy can generate new opportunities for workers to earn.
An increase in income will increase the purchasing power of the consumers leading to a
rise in the aggregate demand in the economy that will push the producers to hire more
factors of production and thus reducing unemployment.
5) Infrastructure Development:
Development of agriculture will require a developed infrastructure for example,
roads for easy transportation, storage houses etc. This will lead to an increase in the
demand for goods and services required for the development and the aggregate
increase in the infrastructure of the economy.
6) Improvement in the Balance of Payments:
With an increased production in the agricultural sector, an economy can start
supplying the surplus to other countries. This might increase the exports of an
economy and lead to a positive BoP. This will also increase the supply of foreign
currencies in the economy.
Scope of Agricultural Economics
a) At the level of microeconomics it helps us understand the various choices a
farmer has to make before starting the production of a crop. The choices are
related to the crop; which crop to grow and which not to, its technique of
production; to use labor or technology intensive technique of production and the
choice of different kinds of inputs to be used.
It also explains how the choices made by the farmer affects the demand of the
consumer, the supply and the price of the respective commodity.
b) At the macroeconomic level, it explains how the agricultural sector has a major
effect on the level of unemployment in an economy and how it can be used as a
tool to increase the employment opportunities in an economy.
c) The progress of the agricultural sector of an economy, gives an insight of growth
of the other sectors in the economy. The growth and development of this sector
ignites a path for the growth and development of other sectors and accordingly
improving the state of the economy.
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