Agricultural Economics I
(Basic Concepts and Farm Records)
Introduction
Economics is the study of how man and society chooses with or without use of money to
maximize out put/ profit and minimize input/cost over a period of time
Agricultural economics therefore is an applied science that aims at maximizing output
while minimizing input by combining all the four resources ie land, labor, capital and
management over a period of time
It attempts to explain how man can best use the limited resources to produce goods and
services which satisfies his needs with minimum wastage or loss of these resources
Basic economic Principles
Scarcity
Economic scarcity means resources are limited in supply relative to demand.
This principle implies that there is no time that man can have enough resources to satisfy
all his need or desires
Choice/Preference
Choice-final decision that farmer make to utilize the available resources
Preference-what farmer prefer most in agricultural production
Human wants are many and varied and means of satisfying them are limited.
Therefore, man has to make a choice among the alternatives in order to use the resources
available.
Man does this by satisfying the most pressing needs first. This is called scale of
preference.
Opportunity Cost
Opportunity cost is the revenue forgone from the best alternative.
It exists only where there are alternatives.
Opportunity cost helps in decision making.
The opportunity cost is equal to zero where;
- There are no alternatives,
- Goods are for gift, inheritance or donation
- Resources are limited, scarce or not enough.
Farm Records
Farm records are documents kept in the farm that show farm activities carried out over a
long period of time
Or information kept in the farm in written form, about the farm and all activities in it.
Uses of Farm Records
Show the history of the farm
Help to compare performance of different enterprises in farm and other farm
Show whether the farm is making a profit or loss.
Show all the assets and liabilities of the farm which can be used to value the farm.
Help in supporting insurance claims on death, theft, fire or loss of farm assets.
Help in tax assessment to avoid over taxation.
Used as a guide in planning and budgeting.
Helps to detect losses or theft in the farm.
Make it easy to share profits or losses in partnerships.
Help in settling disputes among heirs to estate if the farmer dies without a will.
Provide labour information on terminal benefits for a worker eg NSSF.
Type of Farm Records
Production Records - Show the total yield and yield per unit of each enterprise.
Inventory Records - A record of all permanent such as tools, machinery, farm
structure and consumable goods such as drugs, fertilizer in the farm
Field Operation Records - Show in details all field practices carried out together
with the input used for all the crop enterprises such as weeding, fertilizer application etc.
Breeding Records –
Show all the breeding activities in the farm.
From these records it is possible to select the prolific animals and cull the infertile
ones.
Feeding Records – A record of the types of feeds used in the farm and their
quantities.
Health Records –
Indicates the health conditions of the animals in the farm.
From these records it is possible to:
Select and cull animals on health grounds.
Know the course of action to be taken in the event of a disease and maintenance of
good health.
Know the symptoms diseases.
When to vaccinate and deworm
Calculate the cost of treatment.
Marketing Records show commodities sold, quantities and value of all the sales.
Labour Records
- labour utilization analysis shows how labor has been utilized and help to know either to
employ new worker or not
-muster roll they show main working days and payment
