Agricultural Economics

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Agricultural Economics

  1. 1. Agricultural Economics
  2. 2. What is agro-economics? <ul><li>Agricultural economics combines the technical aspects of agriculture with the business aspects of management, marketing and finance. </li></ul>
  3. 3. Agronomics <ul><li>originally applied the principles of economics to the production of crops and livestock - a discipline known as agronomics . </li></ul><ul><li>Agronomics was a branch of economics that specifically dealt with land usage. It focused on maximizing the yield of crops while maintaining a good soil ecosystem. </li></ul><ul><li>Throughout the 20th century the discipline expanded and the current scope of the discipline is much broader. Agricultural economics today includes a variety of applied areas, having considerable overlap with conventional economics. </li></ul>
  4. 4. What Is Agro Economics? <ul><li>Economics is often defined as the study of resource allocation under scarcity. </li></ul><ul><li>Agronomics, or the application of economic methods to optimizing the decisions made by agricultural producers, grew to prominence around the turn of the 20th century. </li></ul><ul><li>The field of agricultural economics can be traced out to works on land economics. </li></ul>
  5. 5. What Is Agro Economics? <ul><li>Henry C. Taylor was the greatest contributor with the establishment of the department of Agricultural Economics at Wisconsin. </li></ul><ul><li>Another contributor, Schultz was among the first to examine development economics as a problem related directly to agriculture. Schultz was also instrumental in establishing econometrics as a tool for use in analyzing agricultural economics empirically; He noted in his landmark 1956 article that agricultural supply analysis is rooted in &quot;shifting sand&quot;, implying that it was and is simply not being done correctly. </li></ul>
  6. 6. The Agro Sector in India <ul><li>Mainstream agriculture </li></ul><ul><li>Allied sectors – horticulture, animal husbandry and pisciculture and fisheries </li></ul><ul><li>Rural development and special area programmes – irrigation, flood control, rain water harvesting and other sustainable methods, research and education </li></ul>
  7. 7. <ul><li>Agricultural growth is pegged at 2.7 per cent. </li></ul><ul><li>Total food grains production in 2006-07 estimated at 209.2 metric tonnes (MT). </li></ul><ul><li>Total water availability in reservoirs up 10 per cent to 120.2 billion cubic meters (BCM) at the end of monsoon 2006. </li></ul>The Economic Survey of India (2006-07) says:
  8. 8. <ul><li>Fishing, aquaculture and allied activities made for 5.3 per cent of the agricultural gross domestic product (GDP). </li></ul><ul><li>Production of wheat and other rabi crops increased with the rains in February 2007 -- sugarcane, cotton, and jute to set new records. </li></ul>The Economic Survey of India (2006-07) says:
  9. 9. More facts and figures <ul><li>One of the most important sectors of its economy (obviously because of the resources) </li></ul><ul><li>The means of livelihood of almost two thirds of the work force in the country </li></ul>
  10. 10. More facts and figures <ul><li>According to the economic data for the financial year 2006-07, agriculture accounts for 18% of GDP . About 43 % of India's geographical area is used for agricultural activity. It accounts for 8.56 % of India’s exports. </li></ul><ul><li>Though the share of Indian agriculture in the GDP has steadily declined, it is still the single largest contributor to the GDP and plays a vital role in the overall socio-economic development of India . </li></ul>
  11. 11. The role of Agriculture in the Indian economy <ul><li>The national income (GDP) </li></ul><ul><li>Employment </li></ul><ul><li>Industrial development </li></ul><ul><li>International trade </li></ul><ul><li>Economic planning, growth and development </li></ul>
  12. 12. Agriculture and the Five Year Plans <ul><li>Objectives </li></ul><ul><li>Increase in production </li></ul><ul><li>Employment opportunities </li></ul><ul><li>Manage population pressure on land </li></ul><ul><li>Equitable redistribution of rural income </li></ul>
  13. 13. Pattern of Investment 4.9 42460 859200 97-02 IX 5.2 79810 1525640 02-07 X 5.2 22470 434100 92-97 VIII 5.9 10530 180000 85-90 VII 5.8 5700 97500 80-85 VI 12.3 4870 39430 74-79 V 14.7 2320 15800 69-74 IV 12.7 1090 8580 61-66 III 11.3 500 4500 56-61 II 14.9 350 2380 51-56 I % of the Total Agro and Allied (Cr) Total Outlay (Cr) Periods Plans
  14. 14. Progress under the Five Year Plans (Economic Survey: 2005-06)
  15. 15. India vis-à-vis Other Nations
  16. 16. Present Status <ul><li>55 years of planning </li></ul><ul><li>The much applauded Green Revolution </li></ul><ul><li>Sufficient food and surplus only since 2002 </li></ul><ul><li>HYV and MSP, marketing, storage, distribution </li></ul>
  17. 17. Present Status <ul><li>Monsoon dependent </li></ul><ul><li>Technology? </li></ul><ul><li>Decline in agro-investment </li></ul><ul><li>Failure of land reforms </li></ul><ul><li>Tenancy exploitations </li></ul><ul><li>Rural population outburst </li></ul><ul><li>Unbalanced agro development </li></ul>
  18. 18. The Actual Crisis <ul><li>Allocation for agriculture in the budget (2007-08). </li></ul><ul><li>Farm credit raised to Rs 1,75,000 crore, providing relief to additional 50 lakh farmers. </li></ul>
  19. 19. The Actual Crisis <ul><li>At 7 percent interest rate farmers receive short-term credit from NABARD, with Rs 3,00,000 upper limit on principal amount. </li></ul><ul><li>The outlay for accelerated irrigation benefit Programme (AIBP) has been raised by 58.22 per cent to Rs 7,120 crore for 2006-07 from Rs 4,500 crore during 2005-06. </li></ul>
  20. 20. The Actual Crisis <ul><li>Banking sector to credit-link an additional 3,85,000 self-help groups (SHGs) in 2006-07. </li></ul><ul><li>NABARD to open a separate line of credit for financing farm production and investment activities. </li></ul>
  21. 21. The Actual Crisis <ul><li>The corpus of rural infrastructure development fund (RIDF) in 12 tranches to be increased to Rs 10,000 crore. </li></ul><ul><li>The programme for repair, renovation and restoration of water bodies to be implemented through pilot projects in 23 districts in 13 states. The estimated cost of the programme stands at Rs 4,481 crore. </li></ul>
  22. 22. Reasons for the Crisis <ul><li>Pressure on land </li></ul><ul><li>Structural deficiencies </li></ul><ul><li>Inflation affects loans </li></ul><ul><li>Storage and distribution network </li></ul><ul><li>Globalisation: liberalised but unfair in many cases </li></ul>
  23. 23. Saving Grace <ul><li>Agriculture research and development and rural infrastructure???? </li></ul>
  24. 24. Future Prospects <ul><li>The Second Green Revolution? </li></ul><ul><li>Food Security? </li></ul><ul><li>Sustainable Development? </li></ul>

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