ECONOMICS OF AGRICULTURAL  Agricultural Policy Formulation

DEVELOPMENT  Promoting Sustainability

 Risk Management and Decision
AGRICULTURE – THE PRACTICE OF Support
GROWING CROPS OR RAISING ANIMALS  International Trade and Global
Agricultural Economy
WORLD FOOD AND DEVELOPMENT
PROBLEMS NATURE OF AGRICULTURAL
 Health ECONOMICS
 Population Growth  The nature of agricultural economics
 Globalization involves the analysis of how scarce
 Environmental degradation resources (such as land, labor, capital,
 Risk and uncertainty and technology) are allocated to
produce agricultural goods efficiently
MEANING OF DEVELOPMENT
 The term development means a KEY ASPECTS
change over time, typically involving  Resource Allocation
growth or expansion. Economic  Market and Policy Analysis
development involves changes in  Sustainability
people’s standard of living.  Interdisciplinary Approach
 Economic Development
SUSTAINABLE DEVELOPMENT GOALS
 no poverty, zero hunger, and good BASIC ECONOMIC PROBLEMS
health and wellbeing.  Scarcity - means there are limited
resources but unlimited wants
MEASURES OF DEVELOPMENT  Choice - based on scarcity means
 Income and development making decisions about how to use
 Improving agriculture limited resources
 Opportunity cost - means that when
CHAPTER 1: ECONOMICS AND you choose one option due to limited
AGRICULTURE resources, you give up the next best
 Agricultural Economics helps optimize alternative.
resource use, supports rural economic
development, and ensures sustainable AGRICULTURAL ECONOMICS AND
practices that benefit both producers OTHER SCIENCES
and consumers.  Environmental Science
 Sociology
ROLES IN AGRICULTURAL ECONOMICS  Agronomy
 Enhancing Agricultural Productivity  Geography
 Economic Development of Rural Areas  Anthropology
Price Stabilization and Market  Political Science
Efficiency
 THE IMPORTANCE OF AGRICULTURAL • INVESTMENT IN CAPITAL THE
ECONOMICS IMPORTANCE OF FARMING
 uses theoretical concepts of • FOOD PRODUCTION
economics to provide answers to the • EMPLOYMENT
problems of agriculture and • CONSERVATION
agribusiness. • SUSTAINABLE DEVELOPMENT
 Agriculture is an integral part of the • CULTURAL PRESERVATION
world food system, having the • EXPORT AND TRADE EARNINGS
foundation links between crops and • RURAL DEVELOPMENT
animal production system. • BIOFUEL PRODUCTION
• CLIMATE CHANGE MITIGATION
CHAPTER 2: NATURE OF FARMING
Farming is the practice of cultivating QUALIFICATION OF A GOOD FARMER
land, growing crops, and raising animals • Agricultural Expertise
• Physical Fitness
CHARACTERISTICS OF FARMING • Communication
1. Diversity • Problem Solving
2. Dependence on Nature • Time Management
3. Seasonality • Adaptability
4. Labor Intensive/ Mechanized • Mechanical skills
5. Risk and Uncertainty • Business Acumen
6. Economic Activity • Environmental Stewardship
7. Technological Influence • Attention to detail
8.Environmental Impact
TYPES OF FARMING
DISADVANTAGES OF FARMING 1. Subsistence Farming – Farmers grow
• Land Conversion food for their own family.
• Pollution 2. Commercial Farming – Farming to
• Water Consumption sell crops or animals for money
• Poverty 3. Organic Farming – Farming without
• Climate Change chemicals, using natural methods.
4. Conventional Farming – Farming
SIMILARITIES OF FARMING FROM with fertilizers, pesticides, and
OTHER BUSINESSES machines.
• PRODUCTION OF GOODS FOR SALE 5. Intensive Farming – Growing lots of
• FINANCIAL MANAGEMENT crops or animals in a small space
• MARKET ANALYSIS
• OPERATIONAL EFFICIENCY 6. Extensive Farming – Using large land with
• RISK MANAGEMENT fewer inputs like water and fertilizer.
• MARKETING AND BRANDING 7. Arable Farming – Growing only crops like
• COMPLIANCE WITH REGULATIONS wheat, rice, and vegetables.
8. Pastoral Farming – Raising animals like cows, • Federation of Free Farmers (FFF)
sheep, and goats.
• International Rice Research Institute (IRRI)
9. Mixed Farming – Growing crops and raising
animals on the same farm. • Philippine Coconut Authority (PCA)

10. Horticulture – Growing fruits, vegetables, • Institute of Plant Breeding (IPB)

and flowers. • Bureau of Soils and Water Management
11. Aquaculture – Farming fish and other water (BSWM)
animals. • Philippine Rice Research Institute (PhilRice)
12. Agroforestry – Growing trees along with Farm Enterprise - means the business of
crops or animals. producing crops, livestock products and aquatic
organisms through the utilization and
management of land, water, labor, capital, and
basic raw materials including seed, feed,
CHAPTER 3: ECONOMIC PROBLEMS IN fertilizer, and fuel.
AGRICULTURE ECONOMIC PROBLEMS IN SELECTION FACTORS OF PRODUCTION
AGRICULTURE
1. Land (Natural resources)
1. Price Volatility
2. Labor (Human effort)
2. High Input Cost
3. Capital (Physical assets)
3. Low Profit Margins
4. Entrepreneurship (Ability to find
4. Land Degradation & Resource Depletion opportunities)
5. Labor Shortages & Migration

NON-ECONOMIC PROBLEMS IN AGRICULTURE Selection Factors

1. Climate Change & Environmental Issues
• Availability
2. Lack of Modern Technology & Innovation
• Cost • Technology
3. Lack of Education & Awareness
• Quality
FARM ORGANIZATION AND MANAGEMENT
Farm organization refers to the way farms are SYSTEMS OF RECORDS AND ACCOUNTS
structured and managed to maximize
productivity. A system of records and accounts in agriculture
refers to the organized method of documenting
Farm Organizations in the Philippines. financial transactions, farm activities, and
production data
• Department of Agriculture
Types of Farm Records:
• Financial Records 2. Commercial Fertilizer

• Production Records 3. Livestock

• Inventory Records 4. Land and Buildings

• Labor Records 5. The price of credit

• Sales and Marketing Records 6. The loan Sharks

• Tax and Compliance Records THE PRICE OF CREDIT - The price of credit
refers to the cost borrowers must pay to access
FARM MANAGEMENT - Farm management in a loan, usually expressed as an interest rate.
agriculture involves strategic planning, resource
allocation, and decision-making to optimize Factors influence the price of credit
productivity, sustainability, and profitability,
encompassing crop production, livestock care, • Risk Level
and financial planning. • Collateral
• Planning and Decision-Making • Government Regulation
• Financial Management • Supply and Demand
• Production Management • Unlicensed Moneylenders
• Resource Utilization LOAN SHARKS - a person who offers loans at
• Risk Management CHAPTER extremely high interest rates

4: FARM CREDIT - It refers to financing for DETERMINANTS OF THE COST OF CREDIT

farmers 1. Interest
• Credit is available in a variety of forms, like as 2. Fees
loans, credit lines, and other financial products
There are two parties which are involved in 3. Method of Payment
credit transactions.
4. Size of Loan
• Credit - It is an individual or organization to
whose future payments are due.
PRINCIPLES IN THE USE OF CREDIT
• Debtor - It is an individual or organization
responsible for making the payment in the 1. Productive Enterprise
future.
2. Timing of Repayment
Reasons why farmers need Credit
3. Rate of Repayment
1. Farm Machinery
4. Size of Repayment
  Fisheries/Aquaculture Insurance - protects fish
farmers or aquaculture businesses
The Role of Credit in Rural Development
 Farm property insurance - covers fire, theft,
1. Improving Farm Productivity and damages from farm structure, equipment,
2. Access to Modern Technology and machinery like tractors and irrigation
systems
3. Expanding Farmland and Livestock
 Revenue Insurance - protects farmers from
4. Seasonal Cash Flow Support income losses

5. Rducing Dependency on Informal Lenders  Index-Based Insurance - modern type of

insurance where payouts are based on weather
6. Disaster Recovery and Risk Management
conditions such as extreme heat, drought, or
7. Encouraging Agripreneurship excessive rainfall

THE ROLE OF CROP INSURANCE

CHAPTER 5: AGRICULTURAL INSURANCE  Risk Management

Nature of Insurance  Income Stability

 Insurance is a financial mechanism designed  Encourages Investment

to manage the uncertainties and risks
 Supports Credit Access
associated with farming
 Food Security
1. Risk Mitigation
CROP INSURANCE IN USA
2. Shared Responsibility
Crop Insurance - A federal program designed to
3. Premium-Based System
protect farmers from financial losses due to
4. Indemnity and Parametric Models natural disasters, adverse weather, and
fluctuations in crop prices. Two main types of
5. Policy and Regulatory Frameworks crop insurance in the U.S.: Multi-Peril Crop
Insurance (MPCI) • Covers loss due to natural
disasters like drought, flood, hail, hurricanes,
TYPES OF INSURANCE frost, and disease.

 Crop Insurance - most common type of • It is the most widely used form of crop
insurance insurance. Crop-Hail Insurance

 Livestock Insurance - cover losses of farm • Protects against hail damage, which can be
animals due to diseases, accidents, theft and highly localized and devastating.
natural disasters.
• Unlike MPCI, it is offered by private insurers
without federal subsidies. THE JAPAN AND
BRAZIL CROP INSURANCE PROGRAM Brazil crop
insurance program

• Agricultural insurance was introduced in the

form of hail coverage in Brazil in 1938. Japan
crop insurance program Types of Agricultural
Insurance in Japan • Japan offers different types
of agricultural insurance to cover various
farming activities:

• Nationwide Programs: Insurance is available

for rice, sugarcane (specific to Okinawa), wheat,
and barley.

• Livestock Insurance: Covers cattle, pigs, and

other farm animals.

• Optional Insurance: Farmers can opt for

insurance for fruits, fruit trees, sericulture (silk
farming), and greenhouses.