What are the economic factors affecting agriculture


Economic Factors Affecting Farming

  • Commodity Prices. The price of major commodity crops such as corn and soy depends of a variety of factors, such as…
  • Subsidies. The American government pays subsidies to farmers who grow commodity crops such as corn and soy because…
  • Labor and Immigration Laws. For better or for worse, mainstream agriculture depends on poorly paid…

Key factors linking agriculture to the U.S. and global macroeconomy are exchange rates, international trade, foreign and domestic income, employment, interest rates, and energy costs.Sep 22, 2021


What are the negative impacts of Agriculture?

Top 16 Negative Effects of Agriculture on the Environment

  • Soil/Land degradation
  • Deforestation
  • Biodiversity
  • Climate change
  • Pest problems
  • Industrial & agricultural waste
  • Irrigation
  • Livestock grazing
  • Chemical fertilizer
  • Point source pollution

More items…

How does agriculture contribute to the economy?

agriculture makes its contribution to economic development in following ways: by providing food and raw material to non-agricultural sectors of the economy, by creating demand for goods produced in non-agricultural sectors, by the rural people on the strength of the purchasing power, earned by them on selling the marketable surplus, by providing …

What are the consequences of Agriculture?

issues associated with agricultural production include changes in the hydrologic cycle; introduction of toxic chemicals, nutrients, and pathogens; reduction and alteration of wildlife habitats; and invasive species. Understanding environmental consequences of agricultural production is critical to minimize unintended environmental conse-quences.

How did farming change society?

What are the types of money?

  • Money comes in three forms: commodity money, fiat money, and fiduciary money.
  • Commodity money derives its value from the commodity of which it is made, while fiat money has value only by the order of the government.
  • Money functions as a medium of exchange, a unit of account, and a store of value.

What are the factors affecting the agriculture?

Different factors which influence agriculture are soil, climate, monsoon, irrigation facilities, availability or adoption of different technology.

What are the physical and economic factors affecting the agriculture?

Physical factors: Terrain, topography, climate, and soil. Institutional Factors: Land tenure, land tenancy, size of the landholdings, size of fields, and land reforms. Infrastructural factors: Irrigation, electricity, roads, credit and marketing, storage, facilities, crop insurance, and research.

What are the 4 factors that affect agriculture?

Environmental factors that influence the extent of crop agriculture are terrain, climate, soil properties, and soil water. It is the combination of these four factors that allow specific crops to be grown in certain areas.

What are the social factors affecting agriculture?

Race, Ethnicity, and Gender. A large body of research has demonstrated that household-level motivations, cultural and social values, and socialization have a primary influence on farm structure, management, and adaptation (Gasson and Errington, 1993; Lobley and Potter, 2004; Salamon, 1992; Bennett, 1982).

Which economic factor is essential for the development of agriculture?

The most important economic factors affecting agriculture are: (a) market (b) transport facilities (c) labour (d) capital (e) Government policies. (a) Market. Market is an important economic factor in agriculture.

What are the factors affecting agriculture class 8?

Answer: The factors that influence agriculture include soil, climate, topography, population etc….Disadvantages of shifting cultivation:Leads to deforestation.Loss of fertility of a particular land.Leads to Soil erosion.Burning of trees causes air pollution.Insufficient cultivation of crops for a large population.

What are the six factors that affect farming?

Six factors interact to affect farm and ranch profits. The number of production units, production per unit, direct costs, value per unit, mix of enterprises, and overhead costs all interact to determine profitability.

What are the major socio economic factors that influence the agricultural sector in India explain?

Significant socioeconomic challenges identified include inadequate access to land, traditional methods of cultivation, inadequate access to credit, inadequate processing and storage facilities, small farm size, and inadequate access to farm inputs.

What is the economic practices of agricultural societies?

agricultural economics, study of the allocation, distribution, and utilization of the resources used, along with the commodities produced, by farming.

How does globalization affect agriculture?

Globalization can greatly enhance the role of agriculture as an engine of growth in low-income countries by making it possible for agriculture to grow considerably faster than domestic consumption.

How does religion affect agriculture?

Results generally indicate a non-neutral effect of religious on agricultural growth. The results accord with perspectives in which classic religions influence traits that enhance agricultural performance, particularly through technological progress.

How does income growth affect food demand?

hamburger to steak) but will not have a significant impact on overall food demand. Conversely, income growth in lower-income countries will likely have a much larger impact on both the composition of food items as well as total food demand. As per capita incomes grow in developing nations, consumers will tend to substitute higher priced meat products for lower valued food items such as rice and wheat products, thus increasing the demand for both U.S. meat and grain exports to feed the livestock in the importing market. Anticipated income growth in developing Asian and African markets (along with population gains) present considerable future opportunities for American agriculture, as well as our competitors.i

How does weather affect ag?

Weather events such as floods, freezes, and droughts impact domestic and foreign ag commodity supplies, and thus can disrupt normal trade flows. Since these weather events are generally localized, trade provides opportunities to move products from surplus regions to those being impacted by the weather events. These events tend to provide a boost to producer prices in exporting nations, while minimizing the price increase for consumers in the nation(s) experiencing adverse weather events. Transportation issues such as flooding, infrastructure decay, labor strikes, and the availability of various transportation modes impact transportation costs, and thus the prices of ag goods in international markets.

What are the factors that affect farmers?

However, some are independent and thus able to develop markets through innovative strategies and direct sales. Subsidies, commodity prices and immigration laws and labour are the major economic factors affecting farming.

What are the physical factors that affect farming?

Topography, soil, and climate are the major physical factors affecting farming. Topography/Relief – Topography relates to how difficult it is to till the land, soil erosion, and poor transportation networks and facilities. Agriculture can be mechanized depending on the topography of land to be used.

Why do farmers get subsidies?

Subsidies – Farmers receive subsidies from the American government to support the growth of commodity crops such as soy and corn. The modern federal agricultural policy assumes that mass production through farming keeps the prices of food low. As a result, it benefits the economy.

What is farming in the Neolithic period?

Farming is the practice of keeping animals and growing crops for raw materials and food. It is an important aspect of agriculture. Started centuries ago, agriculture is as old mankind, but nobody knows its exact age. Farming in the early century gave rise to the Neolithic Revolution.

How does light affect plants?

Light – Light is critical in plant photosynthesis (the process of manufacturing food in plants as sugars) and chlorophyll (the green pigment in plants) production.

Why is farming so competitive?

The farming environment today is economically complex and competitive. It allows farmers worldwide to choose what to grow from what’s produced globally. On the other hand, governments offer financial incentives to farmers on specific types of crops. Most farmers in America are affected by weather and economic factors.

What factors affect commodity prices?

Moreover, international economic factors such as the strength or weakness of the dollar also affect commodity prices. This happens because American farmers don’t just compete with other local farmers, but also growers spread across the world.

What are the factors that affect farming?

Some governments offer advisory services, training and financing to farmers, hence are critical in the farming decisions and results.

How does economics affect farming?

Studying the economic factors affecting farming helps in determining the profitability of agriculture. However, it should be noted that the success of farming depends on various other factors as well, including the decisions made by the farmer. For instance, a farmer must always decide on the best land to use, crops to grow and how to handle other activities in the farm so as to generate maximum yields. The economy is one of the key elements of decision-making that farmers should always consider.

Why do farmers get subsidies?

If a farmer chooses to invest in crops that have subsidies, there are higher chances of increased profitability since they are able to make money regardless of the prevailing market conditions . However, this policy may only apply to farmers in countries where it is operational.

Why is farming important?

Farming is of great significance to the economy considering it accounts for a greater percentage of the materials we use on a daily basis. Besides, farmers also export and import large quantities of agricultural products. This implies changes in the economic status of a country or region can potentially affect farming practices. However, farming also involves a variety of risks.

What determines the workforce required by a farmer?

The size of the farm and activities conducted there in determines the workforce required by the farmer. However, there are instances whereby labor can be quite expensive such that farmers are unable to hire the required workforce. As a result of this, productivity is decreased, causing low yields.

Why is cheap labor important for farmers?

On the other hand, cheap labor can be a great advantage to farmers since it enables them to hire enough workforce for maximum yields. This will cut down the operational costs for farmers, thereby ensuring a wider profit margin.

Why do farmers need to keep up with market trends?

Hence, farmers must keep up to speed with these changes in order to ensure a profitable market for their produce.

What are the socio-economic factors that affect agriculture?

Impact of Socio-economic Factors on Agriculture. There are numerous socio-cultural, economic, political, technological and infrastructural factors which also determine the agricultural land use, cropping patterns and agricultural processes. Of these factors, land tenancy, system of ownership, size of holdings, availability of labour and capital, …

What are the factors that affect the decision making process of agriculture?

Of these factors, land tenancy, system of ownership, size of holdings, availability of labour and capital, religion, level of technological development, accessibil­ity to the market, irrigation facilities, agricultural research and exten­sion service, price incentives, government plans and international policies have a close impact on agricultural activities. The impact of these factors on the decision making processes of agriculture has been illustrated in the present article.

How does land tenure affect agriculture?

Land tenancy and land tenure affect the agricultural operations and cropping patterns in many ways. The farmers and cultivators plan the agricultural activities and farm (fields) management keeping in mind their rights and possession duration on the land. ADVERTISEMENTS:

What is the role of the cultivator in the decision making process?

The ownership and the length of time available for planning, development and management of arable land influence the decision making process of the cultivator. Depending on the na­ture of tenancy rights he decides the extent to which investment on land could be made. For example, if the cultivator is the sole owner of the land, he may install a tube well in his farm and may go for fenc­ing and masonry irrigation channels.

How does the government influence agriculture?

The agricultural land use and cropping patterns are also influenced by the government policies. The fluctuations in the price of sugar­cane, wheat, oilseeds and legumes provide impetus or disincentives to the cultivators to grow these crops. Under certain political condi­tions, the government may stop the farmers to grow certain crops.

Why did the culti­vators of western Uttar Pradesh give up the cultivation of rice?

Many of the culti­vators of western Uttar Pradesh (Saharanpur and Muzaffarnagar dis­tricts) have given up the cultivation of rice owing to the non-avail- ability of workers at the times of transplantation and harvesting. The farmers of Punjab are increasingly dependent on Bihari labourers for the harvest of their wheat and rice crops.

What is labour in agriculture?

Labour represents all hu­man services other than decision making and capital. The availability of labour, its quantity and quality at the periods of peak labour de­mand have great influence on decision making process of the farmer. The different crops and agrarian systems vary in their total labour re­quirements.

What is agricultural economics?

The Definition of Agricultural Economics. Learn More →. Although farming is one of the world’s oldest professions, modern farming is affected by uniquely modern economic factors. Farmers today compete in a complex economic environment where customers choose from produce grown all over the world and governments provide financial incentives for …

Why are commodity prices affected by international economic factors?

In addition, commodity prices are affected by international economic factors, such as the weakness or strength of the dollar, because these farmers are competing with American farmers as well as with growers from all over the world.

Why are commodity prices affected?

In addition, commodity prices are affected by international economic factors, such as the weakness or strength of the dollar, because these farmers are competing with American farmers as well as with growers from all over the world.

Why does the government pay subsidies to farmers?

The American government pays subsidies to farmers who grow commodity crops such as corn and soy because modern federal agricultural policy is based on the assumption that agricultural mass production benefits the economy by keeping food prices low. In theory, this policy provides farmers with a measure of economic stability, and provides consumers with affordable prices on the many processed food products made from these commodity crops. This policy encourages farmers to create an oversupply of a narrow range of crops because they make money for growing these foods regardless of current market conditions.

How do suppliers affect agribusiness?

Suppliers can pose threats to the profitability of agribusinesses when they increase the prices of their products or impact the quality and quantity of those products . If the suppliers are few, it means they have greater power in the market. This means those willing to venture into agribusiness should also look into the availability of suppliers and their behaviors.

Why should agribusiness come into the industry?

For the agribusiness to do well in the industry, it should come into the industry with a unique offering in order to eliminate the competition or create a new standard in the game. For example, you may consider introducing new agricultural products in the market, setting low prices among others.

Why are people reluctant to get into the wagon?

There are various places where agribusiness can thrive quite well but many people are reluctant to get into the wagon because of limited finances. If there is capital and proper financing, agribusinesses are able to expand into many markets and widen their revenue bases for maximum profits.

Do agribusinesses need capital?

Just like other forms of investments, agribusiness requires capital to start. This implies one who is willing to venture into agribusiness must have enough capital to finance all the operations as outlined. Without adequate financing, operations are likely to be paralyzed, thereby negatively impacting profitability.

Is agribusiness a business?

Despite the business aspect of agribusiness, it should be noted that it involves farming. This implies the success does not only depend on making decisions that can ensure profitability. There are other factors too that should be considered for success in agribusiness.

Is agribusiness competitive?

Agribusiness is one of the industries with very high competition. However, the level of rivalry can also depend on the number of businesses, products on demand and exit barriers. This implies every investor has to strive to deliver only the best in order to beat the competition. Before investing in agribusiness, it is important to consider the players in the industry and what they offer in order to come up with a good strategy that can give an added advantage over them.

What are the factors that affect the decision making process of farmers?

Biological and geophysical factors and input and output market conditions are important variables that also impact farmer decision-making and adoption of land use practices or technologies. Biological and geophysical factors that influence production can include water availability, soil fertility, and risks of floods, droughts, frost, or pest or weed infestations, and the importance of each of these factors varies with the types of crops planted (Loomis et al. 1971, Leemans and Born 1994). Input market conditions can shape farmer production decisions in a number of ways; dynamics of local and seasonal labor availability may mean that it is not profitable to grow a crop with a very narrow harvesting window in a month where the overall demand for agricultural labor is high in the region (Fisher 1951, Binswanger and Rosenzweig 1986). Input price volatility and economies of scale with respect to inputs or technologies can also contribute to farmers planting different mixes of crops, or planting more land in one crop than another (Zilberman et al. 2012). Similarly, output market conditions including prices, price variability, transportation costs, and supply chain transactions costs are important determinants of how profitable it is for farmers to grow a crop. Many of these variables are influenced by location; Rogers (2003) notes that communities closer to urban centers are likely to adopt new technologies more quickly. Consumer attitudes and willingness to pay (i.e., the maximum amount a consumer would be willing to pay for a good or attribute) for differentiated crops or particular attributes, such as organic or local production or pesticide-free varieties, also affect the agricultural systems that emerge in response to the demands of a changing market.

How did commodity programs affect agriculture?

In the United States, such programs arose during the Great Depression as increasing yields of these globally-traded commodities (with mostly inelastic demand, or demand that varies little with an increase or decrease in price) contributed to falling prices and, in turn, reduced farm incomes. Although these programs are not directly responsible for increased specialization in the countries where they were implemented, they required production of program crops to receive program payments, and thereby disincentivized diversification. Furthermore, overproduction of commodity crops in countries where they were subsidized led to depressed global food prices, and adversely affected terms-of-trade for developing countries and—in-turn—likely affected their investment in domestic agricultural production as they began to import more food (Mellor 1988, Anderson 1992). In the last decade, commodity prices have increased and the initial logic behind commodity programs has become less relevant; farms are larger and incomes are higher than ever before in the developed countries (Gardner 1992). Even as commodity programs are slowly being eliminated, however, the emergence of crop insurance programs for commodity crops serves as an effective subsidy-in-disguise with questionable social welfare implications (Sproul 2010) and little-to-no benefit for DFS; O’Donoghue et al. (2009) showed that U.S. farmers responded to the 1994 Federal Crop Insurance Reform Act with increased specialization.

What were the changes in agriculture in the 20th century?

The 20 th century brought significant changes to the economics of global agriculture. In more developed countries such as the United States, the face of agriculture was once that of the small family farmer. Today, the agricultural landscape in developed—and to some extent developing—countries is dominated by agribusiness and large farming operations. While many of these operations are still family-owned and farm size, management, and production methods remain diverse, on the whole, farms are larger and more mechanized and specialized than ever before (Schmitt 1991, Chavas 2001, Sumner and Wolf 2002). This transition is a direct result of the increase in relative price of labor and changes in domestic and global agricultural policies (Ruttan and Binswanger 1978, Kislev and Peterson 1982), and was spurred by dramatic improvements in agricultural productivity, and a shift from more labor-intensive agriculture to more capital- and technology-intensive agricultural practices that employed new varieties, synthetic inputs, and irrigation (Griliches 1963, van Zanden 1991, Antle 1999, Chavas 2001, Paul et al. 2004, Dimitri et al. 2005, Hoppe et al. 2007, Chavas et al. 2010). While agricultural production in much of Asia, Africa, and Latin America is more heterogeneous and more labor-intensive in general, specialization, mechanization, and technological change have increased productivity of agricultural commodity crops such as soybeans and sugarcane in Brazil, wheat and rice in China and India, palm oil in Indonesia and Malaysia, and others (Feder et al. 1985, Jayasuriya and Shand 1986, Pingali 2007). Incorporating and disseminating technological advances that improve productivity and incomes in smallholder farming systems remains a challenge throughout the developing world (Barlow and Jayasuriya 1984).

How does technology affect farmers?

Farmer attitudes, resource availability, and education and knowledge are especially important; farmers may be risk-averse toward making changes in cropping decisions or adopting new agricultural practices , or might have very conservative attitudes toward technology or lower or higher levels of concern for the natural environment (McCann 1997, Hanson et al. 2004, Musshoff and Hirschauer 2008, Serra et al. 2008). A farmer’s income or resource base and ability to obtain credit will also influence his/her choice of crops, farming systems, and willingness to invest in new crops, systems, or technologies (McCann 1997, Knowler and Bradshaw 2007). A risk-averse farmer or one who is credit or income-constrained (which often is the norm rather than the exception, particularly in developing countries) may be less likely to adopt new technologies, even if they are likely to reduce his susceptibility to risk or increase productivity or income over the long-run (Nerlove et al. 1996, Hanson et al. 2004). Lack of knowledge and information about the costs and benefits of adopting new technologies or conservation practices or lack of knowledge about how to implement such technologies or practices will also affect a farmer’s propensity to adopt them (Chavas et al. 2010, Chavas and Kim 2010). Even if farmers have full information and can implement new technologies efficiently and at low cost, differences in intertemporal preferences or credit constraints may mean that farmers are unwilling to sacrifice current profits or income for long-term improvements in soil fertility, risk-reductions, or improved yields (Shively 2001, Sunding and Zilberman 2001, Coxhead and Shively 2002).

Why are diversified farming systems unique?

Diversified farming systems share much in common with sustainable, multifunctional, organic and local farming systems, but are unique because they emphasize incorporating functional biodiversity at multiple temporal and spatial scales to maintain ecosystem services critical to agricultural production.

How did the Great Depression affect farm income?

In the United States, such programs arose during the Great Depression as increasing yields of these globally-traded commodities (with mostly inelastic demand, or demand that varies little with an increase or decrease in price) contributed to falling prices and, in turn, reduced farm incomes.

How profitable is it to farm?

How profitable is it to farm? The answer depends upon the choices a farmer makes about what crops to grow and where, what technologies to use, and many other short- and long-term management decisions. Economists assume that farmers make choices so as to improve their utility, or well-being. In particular, farmers tend to pursue activities that increase their income, reduce their financial and physical risk, reduce labor requirements, and are convenient or enjoyable. A variety of constraints play into farmers’ decisions, including constraints with respect to available production technologies, biophysical or geophysical constraints, labor and input market constraints, financial and credit constraints, social norms, intertemporal tradeoffs, policy constraints, and constraints to knowledge or skills (Stoorvogel et al. 2004).

What are the factors that affect agriculture?

to some extent. The factors that directly affect agriculture and its income are land, labour, capital,

What are the factors that affect agricultural production and income in Bangladesh?

The factors that were addressed in the study were land, labour, capital, ethnicity, gender etc. It aimed to analyze the socio-economic characteristics of the farmers in Bangladesh, to investigate the level of agricultural production activities and to identify the agricultural production problems in Bangladesh. The target population was the farmers of eight divisions in Bangladesh. The data were obtained from structured questionnaires, semi-structured interviews and FGD. Multiple linear regression of model fourteen explanatory variables was used to analyze the characteristics of the factors mentioned above in context of farm production and income. The result of data analysis showed that the variables such as gender, age, years of schooling, service area, operational farm size, cow-shed, electricity, radio, mobile phone, television, computer, bicycle, motorcycle etc. affect farmers’ production and income. The research also found gender parity and small farm holding in farming. There should be provision of effective agricultural information dissemination services by using ICT tools in farming. Special emphasis should be given to eliminate gender disparity and resolve small farm holding problem to ensure farm production and income generation.

What are the determinants of agricultural productivity in Nigeria?

The measures of productivity are agricultural gross domestic production, aggregate index of agricultural production, output of major agricultural commodities (staples) and other output of major agricultural commodities excluding staples , and these constituted the dependent variables in the models specified. The determinant variables (independent) are arable land per capita, average rainfall, fertilizer distribution, value of food imports, agriculture capital expenditure and the loans by commercial banks to agricultural sector. The output of the regression analysis showed that the six selected independent variables contributed significantly to the systematic variation in agricultural productivity and output of major agricultural commodities in the four models specified. The results point out that for the Nigerian agricultural sector to be one of the routes to her prosperity in the new millennium, the governments and the private investors should focus their attention on effective procurement and timely distribution of fertilizers. Nigeria needs to intensify dry land irrigation and revival of river basin farming instead of depending on rain-fed farming; making borrowing by small-scale farmers affordable given their income levels. There is need to discourage excessive importation of food items; pursuing the existing land use decree to create access to farmlands and increasing capital investment on agricultural sector via budgets. Key words: Agricultural gross domestic production, aggregate index of agricultural production, output of major agricultural commodities, arable land, average rainfall, fertilizer distribution, food imports, agriculture capital expenditure, loans to agricultural sector.

What determines the classifications of farmers with their F arm size?

area to area and a certain measurement determines the classifications of farmers with their f arm size.

Why is land fragmented?

is fertile but land is fragmented due to the result of social norms and family trends. The total land area


Economicfactors Affecting Farming

Climatic Factors Affecting Farming

  • Climatic factors such as light, water, and rainfall, temperature, air, relative humidity and wind also affect farming in various ways. Just like other abiotic elements of environmental factors such as soil and topography, they influence how crops grow and develop. Light – Light is critical in plant photosynthesis (the process of manufacturing food …

See more on geography-revision.co.uk

Physical/Environmental Factors Affecting Farming

  • Various factors in the natural environment affect farming. Topography, soil, and climate are the major physical factors affecting farming. Topography/Relief –Topography relates to how difficult it is to till the land, soil erosion, and poor transportation networks and facilities. Agriculture can be mechanized depending on the topography of land to be used. It’s impossible to use farm machin…

See more on geography-revision.co.uk

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