The word” agriculture” comes from Latin words “ager” referring to the soil and “cultura” to its cultivation. Agriculture in its widest sense can be defined as the cultivation and/or production of crop plants or livestock products. It is synonymous with farming the field dependent production of food, fodder or industrial organic materials.
Definitions of Agricultural Economics:
Agricultural Economics is an applied field of economics in which principles of choice are applied in the use of scarce resources such as land, labour, capital and management in farming and allied activities. It deals with the principles that help the farmer to use land, labour and capital. Its role is evident in offering practicable solutions in using scarce resources of the farmers for maximization of income.
The science in which the principles and methods of economic are applied to special conditions of agricultural industry.– Prof Gray
The study of the relationship arising from the wealth- getting and wealth-using activity of man in agriculture. –-Prof Hibbard
Agricultural economics is a social science which is concerned with human behaviour during the process of producing, processing, distributing and consuming the products on farms and ranches. –-Goodwin
Importance of Agricultural Economics:
The field of agricultural economics finds to seek relevance between cause and effect using most advanced method viz., production functions and programming models. It uses theoretical concepts of economics to provide answers to the problems of agriculture and agribusiness. Initially earnest efforts were made by economists to use the economic theory to agricultural problems. Now, the subject of agricultural economics is enriched in many directions.
Utility of Agricultural Economics:
Due to commercialsation of agriculture, the importance of Agriculture Economics has increased. The study of Agriculture Economics is helpful in many ways.
1. It is helpful in developing the logical efficiency and faculty of observations.
2. It provides knowledge about production, consumption, exchange, distribution and public finance.
3. By the study of Agriculture Economics, the householders can get maximum return out of their expenditure.
4. It provides wisdom for keeping proper family budgets.
5. Study of Agricultural Economics helps in getting more income with minimum cost.
6. The knowledge of Agricultural Economics increases the marketing efficiency
7. It provides knowledge about division of labour and increases the efficiency of labour.
8. It shows the relationship with other social sciences.
Scope of Agricultural Economics:
The scope of Agricultural Economics is to include the questions- what to distribute, among whom to distribute and on what basis to distribute, what to consume and how to consume.
Agricultural economics also includes the participation and functioning of government in agriculture. The role of government cannot be neglected as a process of production, distribution and consumption and overall upliftment of the rural masses.
It provides technical knowhow, aid and assistance, infrastructure on one hand and regulate input and output prices in the interest of the consumer and the producer on the other. Therefore, government participation is a relevant part of the study of agricultural economics.
Agricultural economics deals with the principles which underline the farmer’s problem of what to produce and how to produce, what to sell and how to sell in order to secure the largest profit for him, consistent with the interest of society as a whole.
More specifically, it deals with the selection of land, labour and equipment for a farm, the choice of crops to be grown, the selection of livestock, enterprises to be carried on and the whole question of the proportions in which all these agencies should be combined. Consumption production and distribution economics is as important for farm people as it is important for them to understand the economics of their farm production.
In short the scope of Agricultural Economics includes production, distribution, consumption and government activities in relation to agriculture and farm enterprises.
Importance of Agriculture in Indian Economy:
Agriculture sector forms the backbone of the Indian economy. India is agricultural country, endowed with abundant natural resources. So prosperity of the nation is largely dependent on agriculture. The role of agriculture in national economy is of vital importance.
1) Share of agriculture in the national income: Between 1950-51 to 1960-61 the share of agriculture was greater than 50 percent of total GDP. The share of agriculture is decreasing continuously and it has declined to 14 percent in 2011-12. However, the share of manufacturing services and service sectors are increasing. The agriculture plays on important role in the nation’s economy which is still dependent on agriculture.
2) Agriculture as a source of livelihood: Agriculture provides employment to around 52 percent of total work force in the country. Agriculture dominates the economy to such an extent that a very high proportion of working population in India is engaged in agriculture.
3) Importance of agriculture for industrial development: Indian agriculture has been the source of supply of raw material to leading industries such as cotton, jute and sugar etc. There are many industries which depend on agriculture in an indirect manner like handloom weaving, oil crushing, rice husking etc. Since ninth five year plan onwards the importance of food processing industries is being increasingly recognized and given due weightage in economic development.
4) Role of agriculture in the field of international trade: Importance of agriculture also arises from the role it plays in India’s trade. Agriculture products such as tea, sugar, oilseed, tobacco, constitute the main items of exports.
5) Support of transport and trade: Agriculture provides the main support for India’s transport system since railways and roadways secure bulk of business from the movement of agriculture products. Internal trade is mostly in agricultural products. Thus agricultural trade provides more opportunities to service sector.
6) Prosperity of farmers is prosperity of industry: Good crops and high products enhance the purchasing power of farmers thereby increasing the demand for other manufactured goods. It will help to stimulate the growth of the non-agricultural sector and also help to reduce and strain on foreign to exchange earnings.
Agriculture growth has direct impact on poverty eradication. Agriculture growth is an important factor influencing inflation, agricultural wages and employment generation. It is clear that agriculture is the backbone of Indian economy and prosperity in agriculture can influence the prosperity of Indian economy.