Agriculture Form 1 – Agricultural Economics I (Basic Concepts and Farm Records)

Introduction

• Economics is the study of how man and society chooses to allocate scarce productive resources to produce various commodities, over time, and distribute them among various consumers in society.
• 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
  

Example;

• food,
• clothing
• shelter
• Agricultural economics is therefore defined as a science that aims at maximizing output while minimizing costs by combining the limited supplies of goods and services for use by the society over a certain period of time.
• These are;
  
• land,
• capital,
• labour
• management
  

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

• 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.
• Where there are no alternatives the opportunity cost is equal to zero.
• Opportunity cost helps in decision making.

Farm Records

• Farm records are documents kept in the farm
• They 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
• 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.

Type of Farm Records

• Production Records – Show the total yield and yield per unit of each enterprise.
• Inventory Records – A record of all permanent and consumable goods in the farm.

Consumable Goods Inventory

• Field Operation Records
  – Show in details all field practices carried out together with the input used for all the crop enterprises.
• 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.