This book covers five crucial facets of agricultural economics, including the fundamentals of agricultural microeconomics, agricultural marketing, farm management, production economics, and agricultural finance. Graphs, numericals, and tabular data are used to cover the fundamental and practical principles of agricultural economics. This book is based on the updated agricultural economics curriculum for the B.Sc. (Hons.) Horticulture degree offered by State Agricultural Universities. Despite the fact that there are many books addressing different agricultural economics principles separately for B.Sc. (Hons.) Horticulture, none of the textbook covers the key ideas in line with the requirements of the B.Sc. (Hons.) Horticulture curriculum. Additionally, this book discusses cutting-edge techniques like Electronic National Agricultural Marketing (E-NAM), online marketing and tendering of agricultural products, and their operational procedures that are not included in any other textbooks but are important issues in the digital age. The B.Sc. (Hons.) Horticulture, B.Sc. (Hons.) Agriculture, B.Sc. (Hons.) Forestry, B.Tech. (Agril. Engineering), B.Tech. (Food Technology), B.Tech. (Dairy Technology), and other under-graduate programmes of State Agricultural Universities are, therefore in need of a book that is unique in filling the gap and has a wide range of applications
Dr. Ashoka N., received his Ph.D. from UAS, Dharwad, and his Post-graduate degree from UAS, GKVK, Bangalore. He currently holds the position of Assistant Professor at the College of Horticulture in Sirsi, Uttara Kannada, Karnataka, and has more than 9 years of expertise in the field of teaching, research and outreach activities. More than 90 full-length research papers, five book chapters, plentiful popular articles, scientific reports, etc. of renowned on a national and international level have all been published by him. For his exceptional work in horticulture education and research, he has won a number of accolades. He has served as the Principal Investigator for copious scientific studies that were supported by reputable funding organisations. At national and international seminars and conferences, he has delivered more than 10 research papers and won the best presentation prize.
Dr. Shivanand Hongal, obtained his Post Graduation from UAS, Bengaluru and Ph.D. from ICAR-IIHR, Bengaluru with excellent academic records. Presently, he is working as Assistant Professor at College of Horticulture, Sirsi. He has an experience of more than 14 years in teaching, research and extension. He has credit of more than 40 Scientific full length papers published in national and international Journals, about 10 papers presented in national and international symposium as author/ co-author. He has undergone the International Training on Intensive vegetable production and modern irrigation technologies at MASHAV International Training Centre, Israel. He has handled several externally funded research projects and also guided many post-graduate and doctoral students. For his contribution towards research and extension work, he has been awarded Young Scientist Award, Outstanding Doctoral Thesis Award, Best Researcher Award and Fellow of Hind Agri-Horticultural Society.
Dr. Harshavardhan M., has experience of more than 9 years in the field of teaching, research and extension activities. Presently, he is working as Assistant Professor at College of Horticulture, Sirsi, Uttara Kannada, Karnataka. He has credit of more than 85 publications in the form of research papers, popular articles, scientific reports, book, etc. of national and international repute. He has received various awards for his remarkable contribution in the field of horticulture education and research. He has been associated in handling the externally funded projects and also guided many post-graduate students.
Dr. Shashidhara N. received his Ph.D. from the UAS, Bangalore and his Postgraduate degree from the UAS, Dharwad. He is currently an Assistant Professor at UAS, Dharwad, and has over 12 years of experience. He has published over 55 full-length research papers, five book chapters, and other publications of national and international renown. He has received numerous awards for his outstanding work in academia and research. He has delivered over 12 research papers at national and international seminars and conferences, winning the best presentation prize.
1. Economics – An Introduction ......................................................... 1
2. Economics’ Nature and Meaning ................................................... 3
3. Scope of Economics ........................................................................... 7
4. Divisions of Economics ..................................................................... 9
5. Types of Economy ........................................................................... 13
6. Economic Systems & Methods of Economic Investigation ...... 15
7. Agricultural Economics .................................................................. 17
8. Consumer Behaviour ...................................................................... 19
Classification of Wants ............................................................ 22
Types of Utility .......................................................................... 24
Cardinal Utiltiy and Ordinal Utility ..................................... 25
9. Law of Diminishing Marginal Utility (LDMU) ......................... 27
Assumption of LDMU ............................................................. 28
LDMU's Limitations ................................................................. 28
LDMU's Importance................................................................. 29
10. Indifference Curve (IC) Analysis .................................................. 31
Properties of Indifference Curve ............................................ 32
Budget Line (Price Line) .......................................................... 33
11. Consumer Equilibrium (Maximum Satisfaction)....................... 35
12. Demand............................................................................................. 37
Practical Exercise on Individual and Market Demand...... 38
Kinds of Demand...................................................................... 40
Law of Demand ........................................................................ 40
Practical Exercise on Demand Schedule .............................. 41
Changes in the Demand can be Shown through Two Demand Curve into Ways ...................... 43
Practical Exercise on Movement in Demand Curve........... 44
Determinants of Demand (Factors Affecting Demand) .... 46
Elasticity of Demand (Alfred Marshall) ............................... 46
Degrees of Price Elasticity of Demand (Based on Magnitude) .............................................................. 48
Practical Exercise on Income Elasticity of Demand ........... 51
Factors Affecting Price Elasticity of Demand ...................... 52
13. Engel’s Law of Family Expenditure ............................................. 55
14. Law of Equi-marginal Utility (LEMU) ........................................ 57
15. Consumer Surplus (CS).................................................................. 61
16. Supply................................................................................................ 65
Practical Exercise on Supply Schedule ................................. 67
The Law of Supply: (S a P) ..................................................... 68
Change in Supply ..................................................................... 68
Elasticity of Supply (ES)........................................................... 70
Practical Exercise on Elasticity of Supply ............................. 70
Degrees of Elasticity of Supply ............................................... 70
17. Market Equilibrium (Theory of Price Determination) .............. 75
18. Price Determination Under Perfect Competition of Perishables ............................................................ 79
19. Factors of Production (FoP) ........................................................... 81
Land ............................................................................................ 81 Labour......................................................................................... 81
Division of Labour (DoL) ........................................................ 83
Theories of Population ............................................................. 84
Modern Theory of Population (Optimum Population Theory) ................................................................... 85
Capital......................................................................................... 87
Classification of Capital........................................................... 88
Organization/Enterprise ......................................................... 89
Forms of Business Organization ............................................ 90
20. Distribution....................................................................................... 97
Rent ............................................................................................. 97
Theories of Rent ........................................................................ 97
Wages ........................................................................................100
Theories of Wages ...................................................................100
Interest ......................................................................................102
Theories of Interest .................................................................102
Profit ..........................................................................................102
Theories of Profit .....................................................................103
21. Agricultural Marketing ................................................................105
Concept and Definition .........................................................105
Subject Matter and Scope......................................................107
Agricultural Marketing's Role, Need & Importance ........107
Markets are Categorized in Following Manner ................111
Marketing Functions ..............................................................119
Marketing Channels ...............................................................123
Market Integration..................................................................128
Marketing Efficiency ..............................................................131
Market Information ................................................................132
Online Agricultural Marketing ............................................133
Electronic National Agricultural Market (e-NAM) ..........140
22. Farm Management (FM) and Production Economics ............147
Basic Terms and Concepts of Farm Management and Production Economics ..................151
Farm Management Principles ...............................................158
Farm Management Decisions ...............................................159
Production Functions (PF).....................................................162
Technical Relationships .........................................................167
Factor-Product Relationship (FPR) (Input-output relationship) ...................................................167
Law of Diminishing Marginal Returns (LDMR) ...............170
Three Stages of Production Function Classical Production Function ..............................................170
Factor-Factor (Input-Input) Relationship (How to Produce) ...................................................................176
Types of Factor Substitution/Factor Combination (Types of Factor-Factor Combination) ................................180
Product-Product Relationship (What to Produce)............186
Types of Product Substitution ..............................................189
Summary of 3 Basic Production Relationships .................193
Law of Equi-Marginal Returns .............................................194
Opportunity Cost Principle ...................................................195
Principle of Comparative Advantage (Regional Specialization) .......................................................196
Time Comparison Principle ..................................................196
Economies of Scale..................................................................198
Types and Systems of Farming.............................................198
Systems of Farming.................................................................200
Risk and Uncertainty (R&U) ................................................202
Break-Even Analysis (BEA)...................................................204
Basic and Applied Cost Principles .......................................207
Farm Planning and Budgeting .............................................213
23. Agricultural Finance (AF)............................................................219
Classification of Credit Based on Various Criteria ...........222
Analysis of Credit Proposal/Economic feasibility test/Principle of Credit Management (3r and 5Cs Test of Credit Worthiness) ..............................228
Repayment Plans/Methods of Loan Repayment .............230
History of Financing Agriculture in India ..........................232
Financial Institutions ..............................................................234
Classification of Co-operative Credit Institutions .............239
Crop Loan System ..................................................................246
Lead Bank Scheme..................................................................247
Scale of Finance .......................................................................248
Kisan Credit Card (KCC) ......................................................249
Schemes for Financing Weaker Sections ............................250
Crop Insurance........................................................................253
Project Management/Project Evaluation Techniques (NPW, IRR, BCR and PBP) .........................256
WTO & ITS Functions (Head Office: Geneva, Switzerland) ...................................262
Depreciation ............................................................................266
References .......................................................................................273
