In our previous topic, you learnt about the various concepts of agricultural production economics. Some of the concepts explained in that topic include: primary, secondary and tertiary production, factors of production, resources, productivity, efficiency, variable, coefficient and slope.
In this topic, you will learn about the various features that distinguish agricultural production from other forms of production.
At the end of this, you should be able to:
list ten features that distinguish agricultural production from industrial production.
explain five characteristic features of agricultural production.
Characteristic Features of Agricultural Production
Agricultural production is a specialized sector of the economy. The conditions under which it operates and the nature of its products differ from all other non-agricultural sectors of the economy. Reddy et al. (2009) identified some of these features to include the following: farming as a way of life, dependence on weather, seasonality of production, perishable nature of agricultural products, joint products, bulkiness and problems of standardization. Other features include:
Time lag in the production of agricultural products, large proportion of land, law of diminishing returns, nature of demand, efficiency of capital and low shares of producer in consumer‟s payment.
Farming as a Way of Life
Most farmers in Nigerian regard farming as a way of life rather than a business concern. This is to say that profit maximization is not their ultimate goal. They are mostly concerned with satisfying the immediate family needs. In line with this assertion, most of them operate small farm size with multiple cropping and scattered plots of farmland. The main goal of non-agricultural or industrial sector is profit maximization. Unlike agricultural production, industrial production is more organized towards achieving this goal.
Dependence on weather
Nigerian agriculture is mostly dependent on natural rainfall. So, Nigeria agriculture is at the mercy of natural weather conditions. Rainfall may be too much leading to flooding of farmland and in some years, rainfall may be too small to sustain the crops leading to drought. All these erratic rainfall conditions can lead to total crop failure. Other weather conditions like temperature, humidity and wind also influence significantly some farming activities. Weather in most cases has no serious effect on industrial production. In industry the production activity can take place under the control of the entrepreneur. The entrepreneur can plan and control the entire production process. The entrepreneur can decide at any point in time to decrease or increase the level of production as dictated by the market situation.
Seasonality of Production
The production of most agricultural commodities in Nigeria depend entirely on weather conditions especially rainfall. Since rainfall is seasonal, most of the agricultural commodities can only be produced during the rainy season. Rainfall dictates most of the farming activities like the time of cultivation, planting and even harvesting. In the case of non-agricultural or industrial production, as long as the raw materials are available, the production can go on throughout the year.
Perishable Nature of Agricultural Products
Unlike industrial products, some agricultural commodities are perishable within a period of one week if they are not consumed. Most fruits and vegetables belong to this category. The perishability of these products coupled with the influence of weather results in price variation of these commodities. Most industrial products are durable and are not subjected to frequent price changes.
Joint Products
Some of the agricultural products are jointly produced. For example, cassava flour and starch, cotton lint and cotton seed, palm oil and palm kernel etc. Since the products pass through the same production process it will be difficult if not impossible to isolate their production costs. In this case both the costs of the main product and their by-products are calculated together. In industrial production, it is possible to separate the cost of production of several products that are produced in the same plant.
Bulkiness of Agricultural Products
Most of agricultural commodities harvested raw from the farm are bulky in nature. The implication of this is that the cost of transporting them from the farm to the market will be high. Similarly, the space and cost of storing them will equally be high. These high costs of storage and transportation imposed some limitations on the movement of these commodities from surplus or production centres to other areas. In contrast, industrial products are neatly packaged and pose no problem of storage and transportation. Industrial products can easily be made available in any part of the country.
Problems of Standardization
There are variations in the farm products with regards to size, shape, appearance, colour etc. This is due to the availability of a large number of varieties of these crops. The implication of this is that, it will be difficult if not impossible to have uniform standard for measuring and grading of the products. In industrial sector, machines can be employed to produce products of the same grade, size and quality.
Price Fluctuation
Agricultural commodities are subjected to price fluctuations due to time lag in their productions. Weather and other factors impose limitations between the period of decision to produce and actual realization of the output. Due to uncertainties surrounding agricultural production, this time lag in the production may upset the plans of the farmer.
Farmers have no control over the weather and marked situations. Between the period of planting and harvesting, price of the product can fall. The price fluctuations of agricultural commodities cause variations in farm incomes. This type of situation does not occur in industrial sectors. Entrepreneur determines the prices of their products due to the current situation on ground.
Required Large Proportion of Land
Most farmers in Nigeria practiced subsistence farming with at least two to four plots of land located in different areas. These scattered farmlands require large proportion of farmland which is not the case in non-agricultural sector. Most industries required relatively small proportion of land and are located in one place.
Law of Diminishing Returns
The law of diminishing returns is applicable to both agriculture and industry, but the difference is that it sets in earlier in agriculture than industry. The obvious reasons are the dependence of agriculture on weather conditions, exhaustion and variations in soil fertility and limited scope of division of labour.
Efficiency of Capital
We earlier define efficiency to mean absence of wastage or using resources as effectively as possible to satisfy the farmer‟s need. The rate of profit maximization to satisfy farmer‟s goal is very slow in agriculture compared to industry. This is because farm business takes relatively larger time to return the investment through income. Therefore industrial sector is more efficient in resource utilization than the agricultural sector of production.
Nature of Demand
Most agricultural commodities belong to the necessity of life, and therefore, their demand are relatively inelastic. This implies that demand for agricultural products are relatively steady irrespective of the price. Most industrial products are elastic in demand. Increase or decrease in the prices of industrial products may have significant influence on their demand.
Low Producer’s Profit Margin
Another characteristic features that distinguish agricultural production is the general low profit margin accruing to farmers. Agricultural marketing is characterized by the existence of too many middlemen. Middlemen in agricultural sector unlike their counterparts in the industrial sector require no formality in the handling of the products and can fix any price acceptable to them.
Middlemen in industrial sector are guided by rules and regulations guiding the handling of their products.
EXERCISE
What are the features of agricultural production?
CONCLUSION
This topic identified some major characteristic features of agricultural production that distinguish it from industrial production. It is quite evident in the discussion that agricultural sector has some peculiar features that distinguished it from other non-agricultural sectors.
SUMMARY
The main points in this unit include the following:
a) That agricultural sector is distinct from the industrial sector because of the following peculiar features of agricultural production:
Farming as a way of life
Dependence on weather
Seasonality of production
Perishable nature of Agricultural Production
Joint Products
Bulkiness of agricultural products
Problems of standardization
Price fluctuation
Required larger proportion of land
Law of Diminishing returns
Efficiency of Capital
Nature of demand, and
Low producer‟s profit margin
ASSIGNMENT
List ten (10) features of agricultural production that distinguish it from industrial production and discuss any five (5) of them
REFERENCES/FURTHER READING
Abbot, J.C. and J.P. Makeham (1980). Agricultural Economics and Marketing in the Tropics. London, Longman Publishers.
Adegeye, A.J. and J.S. Dittoh (1985). Essentials of Agricultural Economics. Ibadan, Impact Publishers.
Nweze, N.J. (2002). Agricultural Production Economics: An Introductory Text. Nsukka. AP Express Publishers.
Olayide, S.O. and Heady E.O. (1982). Introduction to Agricultural Production Economics. Ibadan. University Press Ltd.
Olukosi, J.O. and A.O. Ogungbile (1989). Introduction to Agricultural Production Economics: Principles and Applications. Zaria. AGTAB Publishers Ltd.
Marshall A.C. (1998). Modern Farm Management Techniques. Owerri. Alphabet Nigeria Publishers.
Reddy, S.S., P.R. Ram, T.V. Sastry and I.B. Devi (2004). Agricultural Economics. New Delhi. Oxford and Ibh Publishers Ltd
