Agriculture Economics

AGRICULTURE ECONOMICS

Educational Resources for Secondary Schools

Preface This ebook has been produced to provide quality educational resources to be used by both students and teachers anytime any where. Digital resources have an advantage in that content can be distributed cheaply and even freely because there are no costs on printing as well as having another advantage of being updated at easily without destroying the original material. Agriculture is one subject that is so lively and changing all the time. It therefore has to be taught in a lively way using technology where there are clear videos, images, audio and cloured text.

We therefore have to take note of the current pictures of the vegetation, the grass, the farm structures, agricultural analysis through economic programmes running on TV and the internet.

This content has served to you offline so there is no need of being connected to the internet.

Chapter 1

AGRICULTURAL ECONOMICS The concept of agricultural economics: Agriculture economics is an agricultural applied scientific way of how man and society choose to use the scarce resources to produce various goods and services in agriculture and distribute them to members of the society or community. It aims at maximizing output while minimizing cost, making use of economic principles and relevant disciplines. The resources of land, labour, capital and entrepreneurship are very scarce and are very important, therefore they must be used carefully. It attempts to explain how man can best use the limited resources to provide goods and services in agriculture with which to satisfy his needs such as food, clothing and shelter with minimum wastage of these resources.

Importance of agriculture economics: 1. It assists farmers and lawmakers in deciding; e) What should be produced? f) How much should be produced? g) When should such items be produced? h) Where they should be produced? i) Where should such products be sold? f)

When should such products be sold?

2.

Agricultural economics helps in studying how best to utilize the productive scarce resources.

3.

It helps to guide farmers and farm managers in good financial management.

The role of agriculture in the economy of Uganda Agriculture is the source of food and beverages. It provides almost all the food needed to feed the rapidly increasing population. This saves the foreign exchange which would be used to import food and so reserving this for investment and purchase of capital goods It offers employment opportunities to the greatest part of the population. About 80% of the rural farmers are involved in direct agriculture production. In addition to these direct employment opportunities agriculture also provides employment indirectly to the people working in agro-based industries. Others are employed as researchers, traders, transporters and extension officers.

It provides raw materials such as cotton to textile industries, sorghum and wheat to breweries industry, hides and skins to tannery industry and so on.

It is a source of income to individual farmers. The sales of surplus food and cash crops generate income that is used to settle domestic needs and requirements like school fees, taxes, clothing, health bills etc.

It generates foreign exchange from the export of mainly raw materials; some semi finished products and finished products like cotton, hulled coffee and cigarettes respectively.

Agriculture provides market for manufactured agro-based inputs like hand hoes, fertilizers, and other chemicals for agricultural production.

Leads to improvement of infrastructure like roads, health centers and school constructions using foreign income earned from the agricultural export.

It contributes to the provision of fuel materials like animal residues for biogas and crop residues for firewood.

Agriculture contributes to the improvement and maintenance of soil fertility through provision of manure from crops and animal wastes.

Major characteristics of agricultural production in Uganda: Agriculture in Uganda depends on natural factors, which cannot be controlled. These factors are referred to as exogenous factors because they cannot be explained within the theory of economics. Examples of such factors include; rainfall, soil conditions, pests and diseases.

Agricultural output is seasonal. This results into seasonal food supply and income.

Employment in production also becomes seasonal.

Agriculture is still to a big extent at subsistence level. This means that production is mainly for food consumption and very little surplus is sold for cash.

Agricultural products face persistent price fluctuation due to the effect of natural hazards like drought, unreliable rainfall, pest and diseases, and over production or under production.

This price fluctuation leads to income fluctuation of farmers.

This has a discouraging effect on large-scale production.

Poor methods of production still dominate. Methods like over cropping, mono-cropping, ploughing, planting along contours are still practiced.

Use of rudimentary tools like hand hoes, axes, and cutlasses are still common.

Because of this low there is low production of agricultural goods.

Land tenure system is still poor. The tenure system like communal tenure where land is owned by community rather than the individuals makes no body responsible for the quality of land. On the other hand some individuals leave a lot of land that they cannot fully utilize while others are landless.

Lack of effective cooperative organization. Because of this situation, government assistance to the farmers is limited and the fanners are unable to control prices of their products. Therefore the middlemen exploit them by buying produce from them at substandard prices.

Low income of the farmers. Due to low production and low prices, the farmers' income is also low.

Poor communication facilities. Most farmers lack information about prices in other parts of the country and elsewhere where prices could be higher. This is because they lack access to the communication media like newspapers, radios, magazines etc.

Poor transport facilities. Most roads in the rural areas are not motorable. Therefore farmers cannot get easy accessibility to the markets. This has discouraged large-scale production.

Generally production is low due to many factors in play.

These include lack of knowledge about modern methods of farming, small land holdings and many others.

Two distinct branches of economics: a) Micro-economics; 1. Is the branch of economics which analyses the market behaviour of individual consumers and firms it attempt to understand the decision making process of the firms and the households. It is concerned with the interaction

between individual buyers and sellers and the factors that influence the choices made by buyers and the sellers; for example, the specific sub-groups like the individual consumers or households. b) Macro-economic; 2. This is the branch of economics that analyses the economic behaviour of an economy at aggregate level.

For example; the industrial sector, service sector or farm sector. Factors studied include; inflation, unemployment and industrial production often with the aim of studying effects of government policy on those factors.

Chapter 2: HUMAN POPULATION AND ECONOMY

Chapter two ITS EFFECTS IN AN

Population concepts 1.

Population refers to the number of people living in a given specific area at a given period of time, for example a village, a school, a country, a continent etc.

2.

Demography: It's the study of the population and its characteristics. The characteristics include its growth rate, age structure, religious composition, marital status etc.

3.

Fertility rate: Refers to average number of children a woman is supposed to produce in her lifetime (15 - 45 years) 4.

Population Explosion: Refers to a very rapid increase in population of a: given area. It's caused by a rapid fall in the death rate while the birth rate remains high and increased rate of immigration.

Causes of rapid population growth rate and population explosion in developing country i) Reduced death rates due to better medical care and an increase in the birth rates. ii) Early marriages and high fertility rates hence increase in number of children. iii) Illiteracy, cultural and religious barriers against family planning. iv) Encouragement for large family by some religious and cultural attitudes-towards many children v) modern checks on epidemic and increased availability of food supply

vi) Increased migration to some countries due to wars and search for employment opportunities 1.

Dependants: Refers to people who are supported without producing. These include children aged 0 - 15 years and the old aged 65 plus.

2.

Dependence ratio: Refers to the ratio of the number of dependants to the supporting population.

3.

Dependence ratio =Number of dependants x 100 Labour force

24 1. Fig. 1, the age structure takes the form of a pyramid as shown below.

100 80 60 Age (yrs)

40 20

2. Population quality: Uganda's population quality is still very low whereby about 40% of the Population is estimated as literate population. The majority of people are illiterate especially women in rural areas. This implies that the majority of the labour force is unskilled, where even those educated don't have the required skills.

3. Occupational distribution: The majority of Ugandans are employed in Primary production namely; farming, fishing, lumbering etc with few employed in Secondary and tertiary sectors. This implies that the majority of the people contribute less to G.D.P. 4. Household and institutional population: The census of 2002 defined a household as a group of persons who normally live and eat together. Out of 24.7

million persons in Uganda, 99% are in households. The remaining 297698 are in institutions as homeless or floating population. In the 2002 census, the mean household size in Uganda was 4.7 persons. Kalangala district has the smallest mean household size of 2.7 persons while Pader has the highest of 9 persons.

5. Religious distribution: Most Ugandans are God fearing. There are a number of religions in the country of which the Christians dominate; about 80% of population is Christian. Among the Christians, the Roman Catholics are the majority about 44%.

Economic structure:

implications

of

Uganda's

population

1. High dependence burden/ratio: Almost 55% of the population consists of young dependants who consume without producing. . There is also about 5% of the old dependant above 64 years. The large dependants have made it difficult for the working population (16 - 64 years) to save. This has led to low capital formation, low productivity, leading to low incomes.

2. High government expenditure: The government spends a lot of money to provide medical care and education to the children of who drop out of school system before acquiring basic skills for productive employment. This drains government revenue, which could be made for economic development.

3. High rates of unemployment: This is due to high population growth rate. The rate at which population increases has tended to exceed the rate at which jobs are created. This has caused an economic disequilibrium and pressure on government to cater for the

unemployed. This has also increased on the level of dependency since most people are unemployed with no income.

4. Rural-Urban migration: The majority of people live in rural areas and since there is lack of employment opportunities, high rate of population increase in rural areas and, since some people are landless, many have resorted to leave their rural areas for Urban centers. This leads to urban unemployment and growth of slums with their associated problems.

5. High pressure on land: Although Uganda is not over populated as a whole; certain areas like Kigezi, Bugishu have had population pressure on land, which is causing land fragmentation and landlessness. This has limited the level of production in rural areas wince the rural economy is basically agricultural which requires a lot of land. It has also increased unemployment in rural areas.

6. Poor quality labour. The majority of the populations are not educated. This has resulted into shortage of skilled manpower. As a result, the government has had to rely on expatriates who are very expensive and characterized by income repatriation.

7. Small size of the working population: This is because the majority of people are young below age. The small working population has resulted into low output, low national income and low per capita income.

8. Unfavorable B.O.P: There is need to import consumer goods to meet the needs of the rapidly increasing population and yet the country is unable to produce a lot for export. This leads to deficit, the balance of payments position.

9. The greater number of women retards development: This is because the participation of women in economic activity lags behind that of men.

The Concepts of under population, optimum and over population A. Under population.

This is the population size which is too small for the existing resources like land and capital. In such areas, low output is produced.

Merits of under population; 1. Under population means more resources per person and with better technology it guarantees better output/person.

2. It is easier to organize and unite a small population compared to a large population.

3. It reduces government costs on social infrastructures like hospital and schools.

4. Under population protects the country's resources from being over exploited.

Problems of under population: Small labour force: Under population causes small labour force in the country, which leads to under utilization of natural resources and capital equipments. Consequently the economy operates inside its production possibility frontier.

Small domestic market: There is a small domestic market for goods and services. This leads to low inducement to invest in the private sector which leads to low capital formation which leads to low productivity which leads to low income which in turn leads to small domestic market once again. There is therefore a vicious cycle of poverty from the demand side. It is a big obstacle to economic development. .

High average cost of production of industries: Most industries operate on a small scale at very high average cost of production which makes them inefficient. The few large scale industries have excess capacity.

Low tax revenue: There is a small number of taxes when a country is under populated which leads to low tax revenue.

Consequently, there are large budget deficits (expenditure exceeds revenue) as government expenditure usually exceeds her tax revenue.

Weak defense: A country has a weak defense potential against external aggression as it has few people in the armed forces.

The average cost of providing each person with infrastructural facilities like roads, hospitals etc are very high. The high level of production costs tends to discourage the development of public goods in sparsely populated areas since even their contribution towards national development is small.

Underutilization of the country's resources such as land and capital. This leads to under development since most firms operates at excess capacity or inside its production possibility frontier.

There is lack of competition, which retards economic development. This discourages innovation and invention and thus economic modernization may not be achieved.

The country is faced with vicious cycle of poverty from the demand side.

Overpopulation: This is the population size which is too big for the existing resources i.e. there are many people compared to resources

available. Over population into fall in output and people struggle for the few resources Positive effects of overpopulation: Accelerated population growth means a fast expanding labour force, which could meet the labour needs.

Over population widens the market of goods and services, which may stimulate more investments.

When the country is over populated, more so where the majority is young. It encourages population mobility, as the young people are willing to move to new places.

Over population encourages the exploitation of resources, which would be idle in the economy At times over population is necessary government policies on demography.

to

promote

On political grounds an over populated country is seen as being better in terms of defence potential in case of external aggression.

According to Hirschman, the threat posed by population pressure to living standards will lead to counter development to maintain existing consumption standards. Then counter measure result in an increase in people's ability to control their environment, to organize themselves.

Problems associated with over population: Over exploitation of resources like land: An over populated country has too many people relative to its natural resources. Consequently there is over exploitation of resources, which leads to environmental degradation like deforestation, soil exhaustion, over fishing, mineral exhaustion etc.

Under employment and unemployment: This is because the rate or population increase exceeds the rate of job creation. This leaves many people with low incomes and therefore low standards of living.

Exerts a lot of pressure on land, which leads to land fragmentation and its associated problems of time wasting, smallholdings, environmental problems like deforestation, pollution, land degradation and land disputes.

Increased government expenditure on social services like health and education. This strains the government budget. The resources that could be meant for economic development are spent to satisfy the increasing demands for social services.

Rural-Urban migration: Overpopulation exerts high pressure on land in rural areas, which leads to landlessness of people in rural areas. This leads' to rural-urban migration of people in search of employment opportunities which causes urban unemployment with its associated problems of growth of slums, congestion, robbery, theft etc.

Food shortages: Over populated development countries suffer from frequent food shortages. Consequently, they have to import a lot of food, which leads to balance of payments problems.

Poor quality of labour force: It is difficult to provide education to all which results in poor quality labour force which leads to low productivity and low incomes.

Inadequate social amenities: There is inadequate provision of social amenities in urban centres in an over populated country because the demand for social amenities exceeds the capacity of the government to provide them.

Demand pull inflation: There is inflationary pressure in the economy as aggregate demand for goods and services exceeds the aggregate supply.

Low standards of living. Generally the standard of living in over populated countries is very low.

Low levels of savings: This is because consumption rates are high. This leads to low investments, low capital accumulation and low incomes, which leads to a vicious cycle of poverty.

Optimum population: This refers to population level or size, which is just sufficient to exploit the available resources in the possible way. This is the population size which is neither too small nor too big for the available resources.

Features of Optimum population: 1. High output per capita.

2. High national income figures.

3. High standards of living since every person is involved in the production process.

4. The level of technology is at its maximum.

5. Full utilization of resources and sustainable growth.

Fig 2 Illustration of the concepts of under, over and optimum population Optimum population Output Under Population

over population

An ageing population This refers to the population with a number of old people above 65 years exceeding other age groups. An ageing population is caused by an increase in life expectancy due to very good medical care and the rise in the standards of living. An ageing population has happened in some developed countries where life expectancy is above 75 years for example, Japan, Britain, USA, German, etc.

Economic consequences of an ageing population 1. Number of old dependants: These have to be looked after without producing. This affects the savings of the supporting population.

2. Low productivity: In such a country, the production levels are low because the old people are too weak to work.

3. Small size of the labour force: This is because of the small size of the working age. population. The country may be forced to import labour force from abroad.

4. Immobility of labour: An ageing population is less mobile than the one where there is a large number of young people. This is because; old people are reluctant to move to new places where it will take them time to get new friends.

5. Conservativeness: Old people are more conservative to their old days of doing things. It is difficult to introduce

new ideas and technology. This retards economic development.

6. Large government transfer payments: The government may spend a lot of money to provide services required by old people and provide pension to the old retired people. This drains the government scarce revenue.

7. There is change in pattern of industrial production: Industries have to produce more goods for old people that are on high demand like walking sticks, hats, big trousers and dresses. Industries producing goods for children may other close or reduce the levels of production. The change in demand for goods may cause structural unemployment.

8. An ageing population may provide information and experience to the young population. This experience received may be useful and applicable to the present situation.

A declining population: This refers to the population that is becoming smaller and smaller in size. It may be caused by; 1. An increase in the death rate and a reduction in the birth rate.

2. When the rate of emigration exceeds the rate of immigration.

Consequences of a declining population: Positive effects; 1. A declining population reduces the pressure on the land, which stops the operations of the law of diminishing returns.

2. It reduces excessive demand on infrastructural facilities like hospitals, schools, water supply, power etc.

3. It reduces on the rate of unemployment in the country.

4. It increases capital equipment available for each worker, which Increases average product.

5. There is reduced government expenditure on the provision of essential goods and services.

Negative effects 1. Small size of the domestic market. This discourages large scale production. Industries therefore produce at excess capacity.

2. Shortage of labour force. This is because of the small population size.

3. The country becomes vulnerable to external attacks since it has few people to defend it.

4. Low government tax revenue as tax payers are reduced.

5. The average cost of providing infrastructural facilities is very high.

Implications of the high population growth rates All developing countries, Uganda inclusive, are characterized by high population growth rates. This has both positive and negative consequences.

Positive Implications 1. Increase the size of the domestic market for goods and services. This induces more investment and production on large scale.

2. High population growth rates increase labour force in the country, which leads to an increase in the volume of goods and services.

3. A rapidly growing population has a large number of young people who are receptive to new ideas and are quick at discovering new ways of doing things. This increases the rate of economic growth.

4. High population exerts high pressure on land, which makes people move to places where there are more employment opportunities, which increases the mobility of labour.

5. High population growth rate lead to more resource utilization especially land as long as the country is not over populated. This increases national output.

6. It enables the government to collect more tax revenue if the population is productive.

7. It reduces the average cost of providing social capital in the country.

8. It increases manpower resources for the defense of the country from external aggression.

Negative Implications Leads to a vicious cycle of population growth as shown below.

Absence of monetory Security for old age

High population Growth

Absence of monetary

Low savings

Low income

Low capital

Per capital

Formation

Low productivity

The vicious cycle of population growth shows that high rates of population growth cause low saving due to a large number of children who are dependants, the low savings lead !o low capital formation which leads to low productivity of labour which lead to low income per head. The low income per head leads to monetary insecurity for old age, which makes parents to produce more children who will be their insurance in old age, which causes high population growth rates.

High dependence ratio. There is a large number of young dependants who must be educated;' clothed, fed and housed without producing. This makes it difficult for the supporting population to save which leads to low capital formation.

Increased government expenditure. There is increased government expenditure on the provision of social and economic infrastructure, which is a strain on the budget. If government revenue is insufficient, the expenditure would be financed by borrowing from external sources, which increases the external debt.

High levels of unemployment. High population growth rate results in excess supply of labour in the country. The number

of people looking for jobs exceeds available employment opportunities.

High pressure on land. There is high pressure on land especially in countries with small .geographical sizes. As population increases, some areas become over populated which lead to land fragmentation, which leads to low per capita output.

Rural urban migration high population growth rates results into agricultural unemployment and under employment in the rural areas. This leads to rural urban migration which causes open urban unemployment with its associated problems of robbery, theft, prostitution, growth of slums, congestion etc.

Poor quality of labour. High population growth rates make it difficult to improve the quality of labour force as the majority of children drop out of school system at primary school level.

Vicious cycle of poverty from the supply side as illustrated below.

Low Savings

Low income

Low productivity

Low investment

Low capital accumulation

Figure 1: The vicious cycle of poverty form the supply side

1. There are low savings because of large number of dependants, which leads to low Investment, which leads to low capital formation.

2. Consequently each worker has little capital to work with which leads to low labour productivity which leads to low incomes which in turn leads to low savings again.

3. Lack of food. High population growth rates make it difficult to produce enough food to support the population. There is need to import food which leads to balance of payments deficit.

Population control measures in Uganda A population policy refers to a set of measures aimed at regulating various aspects of population such as growth rate, migration etc.

Due to high population growth rate, there are a number of measures that the government of Uganda has taken to reduce the growth rate. They include the following; Family Planning. This concerns the maintenance of the economic size of the family plus spacing of children. The government has emphasized the use of family planning through establishing family planning units in different districts. The government has also encouraged the activities of NGOs, which provides family planning services.

This measure has not achieved its objective in Uganda.

Religious leaders especially the Catholics have criticized it.

Some cultures prohibit the use of family planning. Besides the services are mostly concentrated in urban areas. This has left rural women out of each.

Education. The government has tried to provide mass education to the masses on the disadvantages of big

families. This has been carried out on radios, Newspapers, charts and magazines.

The limitation with this method is that many people have no access to the mass media especially the print media in villages.

Promotion of girl- child education. The government has put in much effort to promote girl-child education. This is aimed at reducing the child production period since educated women start producing at a late age. Besides educated women tend to produce few children since they may be working with less time to look after their children.

This measure has a limitation because the majority of people do not support girl child education. This is because the drop out of girls from schools is high due to pregnancy.

Encouraging women participation in economic activities and politics. The government has provided credit facilities to enable women start their own businesses. It has also encouraged women to participate in politics. This is aimed at making women busy and occupied.

The limitation with policy is that it caters for only educated women and urban women who are the minority. The majority of women in rural areas are left outside.

Harsh laws against sex offenders. The government has put harsh laws against the sex offenders to discourage them from raping and defiling. For example defilement cases carry a sentence of about 15years.

The limitation with this measure is that most cases of defilement and rape are not reported and brought to law.

Most of the cases are solved by parents were in some cases the victims are compensated with goats, cows or money.

The government has increased the age of first marriage.

Women are supposed to marry at the age of above 18 years while men at the age above 20. This is aimed at reducing the period of child production especially among women. The shortcoming with this measure is that it is expensive to achieve especially when the women are not occupied in any economic activity and are not going to school.

Agricultural modernization. The government has embarked on the modernization of agriculture. This has been through providing improved seed varieties, mechanization and relevant information and knowledge to farmers. This measure is aimed at reducing the demand for children as a source of labour.

However modernization of agriculture is expensive and unaffordable by the majority. The demand for children has therefore remained high.

Persuasive policy. The government has tried to persuade people to have small families. This has been done through formal and informal means such as radio programmes, church meetings, and local council meetings. However information may not reach all people and it even depends on the co-operation of the people.

Immunization of children programmes is being extensively conducted. Consequently, infant mortality rate has been reduced thus assuring parents of the survival of their children, which reduces the birth rate.

The government has embarked on micro and macro poverty alleviation programmes in the country. This has had an effect of inducing people in rural areas to have few children.

Other ensures that may be used include:

Legalizing abortion. This is encouraged in some countries where women are allowed to abort unwanted pregnancies.

The shortcoming with this measure is that is criticized by many people especially Christians. Some women also fear to abort due to negative side effects and resistance from their husbands.

Economic incentives. This measure is used in some countries like China where individuals are given some rewards for producing very few children. The rewards may include free housing, medical care and education.

However in LDCs it may encourage individuals to produce many children since they will feel that they have more income given such as allowances and can afford having more children.

Economic disincentives. In this case, the government may withdraw all economic support given to large families and increase taxes on people with many children so as to reduce the disposable income such that they can limit the number of people to feed.

The limitation with this measure is that the income of most people in LDCs is very low. Children are not catered for in terms of their education, medical care, housing, clothing etc.

Out lawing polygamy. The government can out-law the institution of polygamy which will reduce the birth rate.

Population theories There are two theories of population namely the theory of demographic transition and the Malthusian theory.

The theory of demographic transition This theory explains the population growth rate from a historical perspective in 3 stages. It starts with stage one where the population growth rate is stagnant with high birth

rate and high death rate, to an intermediate stage of high birth rate and decreasing death rate and lastly to a third stage in which the birth rate and death rate are both low.

There are three stages in transition as revealed by the modal above.

Stage 1: Pre-modern (i) Here death and birth rates are high and approx. in balance Birth rates are high due to poverty, illiteracy, ignorance, and cultural demand for children, high fertility rate among women.

The Death rates are also high due to poor nutrition, poor medical care, poor housing, poor hygiene and sanitation.

This is a stage of backward economies. Some developing countries are still in this stage. This stage was experienced

by Europe up to 1890. (ii) There is low application of modern scientific knowledge to eradicate diseases and also lack of family planning practices is common. This stage is characteristics of most LDC's until more recently.

Stage II: Early transition (i) There is a sharp fall in death rates due to improved living standards such as improved medical care, improved sanitation and increase in the incomes of the people. (ii) In this stage, the birth rate is still very high while the death rate is declining.

The birth rate is still high due to religious beliefs and social taboos towards family planning. Increase in food production also induces people to produce more children. The cultural demand for children is still very high. The developed countries experienced this stage during the industrial

revolution. Some LDC's are in this stage where many economies experience explosion as seen with many LDC's.

Stage III: Late transition or modern stage (i) In this stage, the birth rate declines and the death rate also falls.

The birth rate falls because of education, increased incomes, increased economic activities and breakdown of customs and beliefs. Women also prefer to marry at a late age and are ready to adopt family planning methods. Children are not taken as important and some people prefer to remain childless.

The death rate also falls because of improved housing, medical care, nutrition, sanitation and all other social and economic infrastructure. Most of the developed countries are in this stage. (ii) The population growth rate is very low. The natural increase in population growth is less than 1 % per year and is a characteristic of most developed countries today.

Stage 1

Stage 11

Stage 111

Birth rate &

BR

Death rate DR 0

1800

1870

Illustration Demographic transition

1970 Time

Malthusian population theory This theory was pro-founded by Rev. Thomas Malthus, a Briton in 1798. In his Essay, "The Principle population" he

feared that the population of England was heading for danger as a result of its increment.

Malthus based his theory on the following assumptions.

1. Population growth depends on food supply. When food supply increases, population growth also increases and vice versa.

2. Population increases at geometrical progression i.e. it doubles at every interval say 2, 4, 8, 16,32.

3. Food production increases at arithmetic progression i.e. unitary increase say 4, 8, 12, and 16,20,24,28 4. He argued that the supply of food was limited by the law of diminishing returns based on the fact that land is fixed in supply. As population increase, there is less land which leads to decline in food production.

5. Malthus noted that time would come when the supply of food would not keep pace with population growth. According to Malthus, man's biological capacity to reproduce himself would exceed his capacity to produce food. Therefore population growth would exceed food growth. He thus called for population control measures before the excess population would suffer and starve to death due to low food supply.

F ig 6. Malthus explained his theory using the population trap as illustrated below: 32

C 28

16

20

E

24

B 12 8 D4 A2

Time

DBE represents food production

ABC represents growth of population where there are positive checks Population growth can't go beyond B because beyond this point (B) people would start dying due lack of food.

Malthusian population trap is the population level at which population growth rate is equal to food growth. Beyond that point, it results into excess population growth over food growth which leads to starvation and death.

The population trap represents the population that can be supported by the available resources (food). The population trap corresponds to the optimum population.

Before point B, food supply increases at a high rate compared to population growth. In this stage, there are few people compared to the available resources (food). This part corresponds to under population. After point B, there is excess population in relation to food supply. Without population control measures, this excess population would die of hunger and starvation. People may also die of wars as they fight for the scarce food. Some people may also die due to diseases and congestion and poor feeding. '

Malthus says that population growth should be controlled to avoid suffering and he suggested measures like positive checks and preventive checks.

Positive checks - These are natural measures that increase death rate. They include diseases, famine, poverty, war etc.

Preventive checks - These are measures that reduce birth rate. They are exercised by man himself and include; late coming, moral restraint like celibacy which looks at remaining single for both men and women.

Malthus recommended preventive checks if mankind was to escape from impending misery. If preventive checks were not effectively used by man, then positive checks would set in. Consequently population would be reduced to the level which could be sustained by the available level of food supply.

Every effort to improve welfare of man through subsidies, high wages and charity organizations would fail because individuals would produce many children hoping charity organizations would help them. Malthus was therefore against giving help to people.

Limitations or criticisms of Malthusian population theory The theory is based on a number of simplistic assumptions and hypothesis that do not stand the test of time and therefore the population trap theory can be criticized on several grounds.

Malthus assumed that population growth depend on food supply alone. This is unrealistic. There are many other factors which determines population growth like the level of education of parents, standard of living, cultural beliefs about children, family planning and government population policy which Malthus ignored.

Malthus assumed that the supply of land was fixed for agricultural production. But he ignored the fact that land can be improved through the use of fertilizers, irrigation and land reclamation. This increases the supply of food to support an expanding population.

He assumed that technology was fixed. But there has been technological progress form the time of Malthus up today, which has led to increased production of goods and manufactured products thus preventing the law of diminishing returns from setting in.

Malthus did not take into account the existence of international trade. He assumed that the increasing population would be supported by only home produced food.

But countries trade with one another and if home produced food is insufficient; more food can be imported to feed the people.

He under estimated the influence of education and rising standards of living in reducing high birth rates, which controls population growth. As parents become more educated and their standard of living rises, they tend to have fewer children whom they can give education. This reduces the birth rate.

He ignored the possibility of emigration to other countries, which was going on during his time to countries like Canada, U.S.A, and Australia as a solution to the population pressure on land.

The theory was based on subsistence agriculture. He failed to visualize that in the economy; there would be industrial revolution which would enable countries to produce manufactured goods which would be exported in exchange of food to feed an expanding population.

Malthus suggested preventive checks like late marriage, celibacy as population control measures. These are not realistic because they are very hard to exercise in most LDCs Malthus ignored the role of foreign aid in the provision of food. Most countries with shortages of food get their food in form of relief aid.

The existence of trade and modern means of transport were ignored by Malthus. This can help in transporting food from surplus areas to deficit areas.

He did not know that industries could be set up to produce synthetic types of food that could increase production in the nation.

His theory did not indicate the time when population growth would outstrip food supply. If the time was known, governments would take appropriate measures to increase food supply or reduce population.

The theory was written on Britain's unique economic circumstances of the time. The population was growing rapidly due to high birth rate and falling death rate. But resources were limited due to the small geographical size to support an expanding population.

The validity of Malthusian theory It is true that population will double at every 25 years. This is true even in Uganda for example in 1956 the population of Uganda was 6.5m and by 1980, it was 12.6m.

It is true that population is a function of food because no man can live without food. It is true that man will die after 4 days and a woman win die after 7 days without food.

He predicted poverty due to high population growth rate and this is true with LDC's where there's wide spread poverty

due to high population growth rate that has led to high dependence ratio, low savings, low productivity, low incomes etc.

He mentioned scrambling for land as it would become scarce. There are always communal quarrels and land disputes which has led to death in some areas.

Agriculture in some developing countries, which are over populated, is subject to the law of diminishing returns as predicted by Malthus, Malthus predicted disasters like wars, diseases that result into death. Today in LDCs, the death rates are high due to such diseases for instance malnutrition.

LDC's face famine from time to time due to shortage of food as Malthus predicted it.

Proposed policy on population control measures Educational policy should be geared towards providing more educational opportunities for women because the more educated the women, the fewer children she delivers.

Government should ensure that it provides well-paid employment opportunities to the women to enable them be part of the family finance planning and utilization.

The family planning program and services. This should be extended to rural areas, which are associated with rapid population growth rates, and where possible, such services should be free.

There is need for improvement on health facilities and services so that a person with small family is assure of its survival.

The age at which people marry should be set in the appropriate marriage law.

Where means permit, financial inducement for small families could be introduced to discourage raging polygamy.

There is need to legalize abortion and also change the marital status with the view of discouraging polygamy THE ROLE OF DEVELOPED NATIONS PLAY IN HELPING DEVELOPING NATIONS TO CONTROL POPULATION 1. In dealing with population and development it is not a question of number. Consider the fact that 30% of the world’s population accounts for 80% of its annual resource utilization.

Therefore the worldwide programmes of encouraging the developing world countries to effect a good balance between resources and population growth must be enforced by freeing people from extravagant life style. This will free resources that can be transferred to the poor countries.

2. Migration of current world population problems can be achieved by the developed countries liberalizing the legal conditions for the international immigrations of poor, but skilled workers in their countries.

3. The rich countries should help m financing family planning programmes in the developing nations.

Chapter 3 : PRINCIPLES OF ECONOMICS What are the essentials of Economics?

Here are the Essential Principles of Economics, 1. Division of Labour: We consider division of labour first mainly because Adam Smith did argue that division of labour is the key cause of improving standards of living. Modern economics doesn't do much with the concept of division of labour, but two closely related concepts are important: Returns to Scale; Returns to scale may be increasing, constant or decreasing.

Increasing returns to scale is the case that leads to special results, and division of labour is one cause (arguably the main cause) of increasing returns to scale.

Viscious Circles in Economic Growth; For Smith, a major consequence of division of labour or decreasing and resulting increasing productivity was a "virtuous circle" of continuing growth. Modern "virtuous circle" theories have more dimensions, but division of labour and increasing returns to scale are among them.

2. Opportunity Cost: The idea is that anything you must give up in order to carry out a particular decision is a cost of that decision. This concept is applied again and again throughout modern economics. If (God forbid) you were to learn only one of the Principles of Economics thoroughly, this should be the one.

Scarcity: Economic scarcity means resources are limited in supply relative to demand. That is to say the goods and services

available are scarce relative to people's desire for them. This principle implies that there is no time that man can give enough resources to satisfy all his needs or desires.

According to modern economics, scarcity exists whenever there is an opportunity cost, that is, wherever a meaningful choice has to be made. 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 preference.

Production Possibility Frontier: The production possibility frontier is the diagrammatic representation of scarcity in production.

Comparative Advantage: A very important principle in itself and a key to understanding of international trade the principle of comparative advantage is at the same time an application of the opportunity cost principle to trade.

Discounting of Investment Returns: Another application of the opportunity cost principle that is very important in itself, this one tells us how to handle opportunities that come at different times.

3. The Equimarginal Principle: This is the diagnostic principle for economic efficiency. It has wide applications in modern economics. Two of the most important are key principles of economics in themselves: The Fundamental Principle of Microeconomics: This principle describes the circumstances under which market outcomes are efficient, and The Externality Principle

Describes some important circumstances in which they are not. Of course, the equimarginal principle is founded on.

Marginal Analysis: Also an important principle in itself and very widely applied in modern economics. There is no major topic in microeconomics that does not apply marginal analysis and opportunity cost. The link shown above is the marginal analysis of productivity, but marginal analysis also has applications to cost, revenue, consumer's utility and benefits, and more.

4. Market Equilibrium: The market equilibrium model could be broken down into several principle-the definitions of supply, demand, quantity supplied and demanded and equilibrium, at least- but these all complement one another so strongly that there is not much profit in taking them separately. However, there are many applications and at least four important subsidiary principles.

Elasticity and Revenue; These ideas are a key to understanding how market changes transform society.

The Entry Principle; This tells us that, when entry into a field of activity is free, profits (beyond opportunity costs) will be eliminated by increasing competition. This has a somewhat different significance depending on whether competition is "perfect" or "monopolistic".

Cobweb Adjustment; This might give the explanations when the market does not move smoothly toequilibrium, but overshoots.

Competition vs. Monopoly; Why economists tend to think highly of competition, and lowly of monopoly.

5. Diminishing Returns: Perhaps the best-known of major economic principles, the Principle of Diminishing Returns is much more reliable in short-run than in long-run applications, so the Long Run/Short Run dichotomy is an important subsidiary principle. Modern economists think of diminishing returns mainly in marginal terms, so marginal analysis and the equimarginal principle are closely associated.

6.

Game Equilibria:

Game theory allows strategy to be part of the story. One result is that we have to allow for several kinds of equilibria.

We have Non-cooperative equilibrium Prisoners' Dilemma (dominant strategy) equilibria which are Nash (best response) equilibria, (but not all Nash equilibria are dominant strategy equilibria), and Cooperative equilibria. And that's just the beginning. The main applications in this book, and traditionally, are in the study of Oligopoly.

7.

Measurement Principle:

Economics is multidimensional, and that creates some difficulties in measuring things like production, incomes and price levels. Some of the problems can be solved more or less fully.

Value Added and Double Counting: One for which we have a pretty complete solution is the problem of double counting thesolution is, use value added.

"Real" Values and Index Numbers: Since we measure production and related quantities in dollar terms, we have to correct for inflation. Index numbers are a pretty good workable solution, but there are some problems and criticisms.

Measurement of Inequality: Another issue is that the "Average income" may not mean very much, because nobody is average and income is unequally distributed. Even if we cannot correct for that (what would that mean?) We can get a rough measure of the relative inequality and see where it is going.

8. Medium of Exchange.

Money is whatever is generally acceptable as a medium of exchange. That means abank, or similar institution, an literally create money, so long as people trust the bank enough to accept its paper as a medium of exchange. We might call this magical fact the Fiduciary Principle.

9. Income-Expenditure Equilibrium: Like the market equilibrium principle, but even more so, this model pulls together a number of subsidiary principles that complement one another and together constitute the "Keynesian" theory of aggregate demand. The implications of this theory are less controversial than the word "Keynesian" is-controversy has to do more with the details than the applications. Among the subsidiary principles are; Coordination failure The income-consumption relationship The multiplier Unplanned inventory investment Fiscal Policy

The Marginal Efficiency of Investment The influence of money on interest Real money balances.

Monetary Policy

10. The Surprise Principle: People respond differently to the same stimuli if the stimuli as a surprise than they would if the stimuli do not come as a surprise. This new economic principle plays the key role with respect to aggregate supply that "Income-Expenditure Equilibrium" plays with respect to aggregate demand.

Rational Expectations: People don't want too many unpleasant surprises. If they use the information available to them efficiently, then they won't be surprised in the same way very often. This can lead to; Policy ineffectiveness; But it is hard to reconcile this way of thinking with the apparent.

Permanence; Of many economic changes especially those in unemployment. These suggest that the economy has a degree of Path Dependence; And that would put the independence of aggregate supply into some doubt.

Chapter 4: EDUCATION: AS A FACTOR IN DEVELOPMENT: Education is an .acquisition of knowledge and skills. It can be formal or informal. It offers a way by which to accumulate capital.

Benefits of Education: Reduces unemployment due to lack of skills or knowledge.

Means of social change; eradicates backwardness, practices, superstitutions, beliefs, values etc. So creates reign attitude, values, and morale for economic development.

Education acts as a breve and helps to identify competent and talented people for placement in areas where the best use can be made of them.

An instrument for rural development. Adult literacy campaigns, agriculture extension programs, public health programs, can easily be disseminated through educating the rural population.

Raises the quality of labour and its efficiency and productivity by increasing the technical knowledge of the labour.

Improves entrepreneurial skills of people.

Produces scientific personnel that undertake research and experimental projects. This leads to skills and technological progress.

Reduces income inequalities if it accessible to all since almost all citizens will be educated and more chance to employment.

Checks population growth, delays marriage, educated people tend to produce less (fewer children).

Education is used to forge national unity, develops a chance of nationalism and shape leadership qualities. All these are essential for accelerated economic growth.

Increases demand for goods such as stationery has otherwise been spent on importing expatriate manpower.

Problems and negative roles of Education in fewer developing countries: Deteriorating stands of education and due to inadequate facilities.

Brain drain where expatriates leave their countries for other where they are highly paid.

Involves high costs; i.e. builders, teachers; salaries, and other operating costs.

Some theoretical subjects taught create job seekers of white collar-jobs that are not readily available.

Educated people demand for luxurious goods that are imported.

Many pupils drop out-leave school in primary without qualifications, skills. This causes wastage of resources, thus frustration and misery.

Failure to promote national unity. Many elites-examine national issues on narrow, myopic and sectarian lines or an alien predisposition.

The present education system is geared to passing exams and obtaining papers. It had failed to import cultural values of honesty, discipline and a sense of social responsibility.

The education system does not prepare people to live in rural areas. The elites shun manual labour and agriculture.

The formal education sector had produced paper qualified staff to replace the informally trained (trained on job) staff who at times are better at practical skills.

Solutions to the problems: Improve working conditions to reduce brain drain.

Man-power planning should be done so that training is in line with the labour requirements.

The educational curriculum should change to soot the needs of developing countries; vocational should be taught e.g.

Agriculture, woodwork, metal work, tailoring etc and be taught.

Income inequality between the educated and uneducated should be reduced by fiscal policy e.g. through progressive taxation.

Rural development can help to check rural-urban migration and encourage school leavers to go back to rural areas.

Educational loans and scholarship should be extended to needy students. Work-college programs should be encouraged to expose youth to work and enable them to meet college costs.

The government should provide enough training facilities to the schools to improve the quality of labour trained.

There should be free and compulsory primary education.

Education reduce illiteracy rate and drop out ratios.

The rate of drop-outs should be reduced by designing flexible school programs suitable for conditions of each locality, drop-outs should be availed opportunities to drop back to each.

Full utilization of the available institutions should be ensured to increase opportunities for education through evening classes and distance education.

Private investments in education should be encouraged especially m technical institutions, polytechnics and universities.

Community oriented schemes e.g. adult literacy programs, agriculture extension programs, should be encouraged to prepare the educated people to live in the rural areas.

National service schemes combining military training manual labour and political education should be integrated to develop a sense of nationalism and establish a functional function relationship between education and the world of work

Chapter 5 PRODUCTION This is the process in which resources are transformed into products usable by a consumer. This is therefore the creation of utility.

Utility is the ability of a good to satisfy human wants. Utility is of three types: i) Form utility: The good should be in the form in which it is able to satisfy human wants. ii) Place utility: The good must be available in the place in which it required to satisfy human wants. iii) Time utility: The good must be available at the time in which it is required.

FACTORS/RESOURCES FOR PRODUCTION: In Agricultural Economics, we recognize four factors or four major resources; land, labour, capital and management/Entrepreneurship.

1. Land: Land is essential in agriculture, for most of our crops are grown on the land. Land includes all types of free gift of nature and as a natural wealth that's used in production.

In Agriculture, the term 'agricultural land' can be divided into two sections. They are; a) Those which cannot be increased by the activities of the owner of the land. b) Those whose size can be increased by the deliberate activities of the owner of the land.

Farm land may appreciate in value due to the following:

Addition of fertilizer and lime, good cultivation, practices ensuring good soil, weeding, use of clean seeds, and liberty from urban pollutants. Likewise form land may depredate owing to one or more of the following; All farms of land abuse, erosion increase, incidences of weds, diseases and pests payment for use of land is called Rent.

2. Labour: It's the human effort extended in production. It can be skilled, semi skilled or unskilled. Payment for use of labour is called a wage.

Labour is classified into operator labour, family labour and hired labour.

Operator labour: This is where the owner of the farm does some work himself on the farm. One has to discipline oneself for operator labour to be effective. Eg drunkard may not always have the energy to do farm work.

Again, a farm operator relying solely on his own labour has to determine the rate at which he can work.

Family labour: Here members of the family are organized by the operator, normally the head of the family. Work is assigned to members according to the age group in order to ensure effectiveness.

3. Hired labour: Here the operator pays off some individuals who are capable and willing to do farm work. However, one has to be very cautious in hiring labour.

Importance of labour: 1.

It utilizes land and capital for production to occur.

2. It determines the value of a good. Labour intensive products are very expensive.

3. Labour consumes goods produced since goods and services are produced for humans.

4. Labour force determines the output from a productive venture.

5. It generates capital by the accumulation of the rewards it gets from offering the labour.

Characteristics of labour: • Labour is human effort and is produced by human beings.

• Labour is inseparable from its owner.

• Labour is mobile; it can be moved from one place to another or from one job to another.

• Labour cannot be inherited unlike land or capital since each individual owns personal skills • Labour has a high opportunity cost. It takes a lot of time and money to train labour. These resources could have been used in another way.

• Labour has a will of its own unlike land or capital. It has the capacity to make its own decisions or modify instructions given to it Factors that influence availability of labour: The total population: The larger the total population, the greater the availability of labour.

The proportion of percentage of the total population in the labour force: The larger the percentage of the population in the working age bracket, the greater the availability of labour.

The wage rate offered: the higher the wage rates, the more attractive the jobs and the more willing people will be to offer their labour.

The health of the workers: The healthier the labour force, the more the amount of labour they can provide.

Average hours worked per day per person: Where the people are required to work for long hours on a single task, there will be less labour in circulation than when the people can work for shorter hours and therefore do more than one job.

Capacity and output of the workers: Some workers are bound to be more productive than others due to differences in motivation, level of training etc.

The level of skins required: For jobs that require high skill levels, labour supply is greater and more even than where the job requires little skills.

Mobility of labour geographically and occupationally: Where people can move from one job to another or from one Iocality to another, labour supply is greater and more even than when people are less mobile.

Working conditions: Where the working conditions are ideal, more people will be attracted into the labour force than when the working conditions are in conducive.

Political stability: Areas that are free from insurgency attract more labour than those characterized with conflicts for instance the central districts of Uganda attract more labour force compared to the Northern districts.

Nature of the job: Some jobs are more attractive than the others depending on the risks or uncertainties that prevail.

Risky jobs may not be very attractive even when financial

rewards are great. A case in point is mining, the military forces etc.

Publicity of job opportunities: Labourers are likely to offer their services more if they are aware of the existing jobs in the market.

Attitude towards work: Some people may want to remain unemployed even when there is something to do, especially in communities which recognize these out of work by attaining favourable social benefits.

Retirement benefits: People are more attracted to those jobs that offer a favourable retirement package for them when out of the job. For example, public service and NGOs, which recognize humanity?

Net flow of labour force: Through emigration and immigration. In a liberalized economy, where regional and international borders offer free entry and exit of resources for instance labour force will be more available to offer labour than where there are barriers at the borders.

EFFICIENCY OF LABOUR: This is the ability of labour to accomplish the assigned duties in a specified period of time How to increase labour efficiency: Providing an appropriate remuneration. When workers feel that they are not being exploited they invest more effort in their work and are therefore more efficient.

Specialization. Giving workers specific tasks according to their skills enables them to develop their skills on the job and become more efficient.

3. Adequate supervision. Semi skilled or unskilled labour force should be highly supervised to ensure that they accomplish work as demanded.

Subsistence facilitation. Labourers who are well catered for meals while at work, work better than when they are offered nothing throughout the working day.

Provision of transport. Consistent and timely transport ensures that workers are at their working station on time and avoid loss of man hours, hence increasing their efficiency.

Provision of housing. This increases the workers' comfort and their esteem and avoids man hours lost when employees commute from far off residence. Consequently this increases their efficiency.

Provision of entertainment slots at place of work .during the working days. Entertainment provides away of escape from bad feelings and reduces stress while at work and so increases efficiency.

Mechanization. The use of machines increases the speed and may increase accuracy and output of labour hence increasing efficiency.

Training of labour force. This can be done through providing refresher courses, on job training or another perspective. Thus improving upon their skills and efficiency as well.

Improving/proper human resource management.

Treating labourers humanely and professionally increases their efficiency as it raises their esteem and willingness to work.

Assigning an appropriate workload. Humans are like machines. The longer and harder they work, they should then be given appropriate load to ensure efficiency.

CAPITAL: These are resources made by man to broadly use can group capital resources employed in agriculture into two. a) Durable or fixed capital: This includes ail items which have more than one year of useful life. E.g. buildings, machinery, equipment and land improvements such as terraces and dams. b) Working or circulating capital: These include, market livestock and feed, cash needed for operating expenses such as fuel, and fertilizers.

Capital is of two types and these are; i) Real capital: This includes a stock of physical assets e.g. roads, railways, factories, buildings e.t.c. ii) Money/financial capital: This is money invested in the business to produce more goods and services.

The payment for use of capital or borrowed money is called interest while returns on capital are called profits.

Importance of capital in production: Capital enables the entrepreneur to mobilize other resources of production; land and labour to effect production.

Real capital can be used as collateral security for bank loans.

Capital enables exploitation and further utilization of the available natural resources, It improves the quantity and quality of the national output which raises the national income.

It increases the effectiveness of the labour force by procuring machines, tools and equipments.

Capital increases the productive capacity of a nation by exploiting the idle resources.

Capital can be exported to other nations to generate and accumulate wealth.

MANAGEMENT/ENTREPRENEURSHIP An entrepreneur is someone who runs a business to make profits.

Functions of a Management An entrepreneur is a person who undertakes the task and risk of organizing other factors of production to make production possible.

Is the overall supervisor of the production process on the farm?

Carries out innovations and decision making.

Bears the risks and uncertainties in production.

Makes production decisions Finds market for produced goods and services.

Co-ordinates the whole activities undertaken in the enterprise/project.

Entrepreneurship therefore is the ability or imitativeness of a person to be able to fully utilize all the available materials so as to produce the desired products.

Decisions taken before a farmer or entrepreneur produces products: a) A Manager is expected to follow the following guiding questions in order to make viable decisions. b) What to produce? This is determined by several factors such as resources available, the level of

technology available and others. He many have to produce only livestock and no crops or a combination of the two. It pays if one embarks on mixed farming. c) How much to produce? This will be determined by several factors notably finance. A manager with a working capital of only 1. ÂŁ500 cannot expect to produce 4000 heads of cattle at once. Also the area of land at the disposal will determine how much crops to produce. The amount and kind of labour available are also determinants.

2. The equipment to use. This is determined by the level of technology. In developed countries, capital intensive techniques are used coupled with high level of mechanization. In LDCs, due to low incomes and inadequate training, appropriate and rudimentary ways are employed.

3. Farm practices to employ: Farm areas differ from one another. Some are located on flat grounds, some on hilly grounds and some in valleys. These differences I11ay necessitate different fanning practices such as contour ploughing, terracing, strip cropping, fallow or keeping the land under grass.

4. Amount of resources to use. A Manager should know how much feed each animal requires, the rate of fertilizer application, how many workers to be assigned to an acre. Decisions of this nature are very important in farm management.

5. When and where to sell and buy. Knowledge of marketing is very important to a farm manager. When to sell is important as the farm produce should be sold at a time when the manager should realize good prices from them. He should also buy when prices are fairly low.

Where to sell is important as he should sell his produce in markets where he will get good prices for them.

6. Question of financing. Many farmers are poor and a good percentage farm for subsistence. To increase their volume of operations, they require capital. Credit facilities are inadequate; also agricultural/financing is unheard of so even when available services of a financial expert are required.

The law of diminishing returns and opportunity cost: The law of diminishing returns may be stated as; if a variable resource is added to fixed resources, marginal output will eventually decline either in the short run or after a stage of increasing returns.

Owing to the operation of the law of diminishing returns in agriculture, many form operators often lose a lot of revenue.

Such operators fail to know the point at which additional inputs bring in no more profit. Unfortunately, a farm operator can know when that point is reached only by the process of trial and error.

Chapter 6 PRINCIPLES OF DEMAND AND SUPPLY DEMAND: It is the quantity of a commodity a person is willing and able to buy at a given price in a specified period of time.

The desire for a commodity backed by the ability to pay for it is refer and to as effective demand. The aggregate of all the individual consumers' demand is referred to as the market demand.

Demand schedule; For any given commodity being offered for sale in the market, there is usually a state of demand for that commodity, i.e. what the volume of sales will be, e.g. weekly at each of a series of prices, such presentation is often tabulated and it represents a demand schedule.

A demand schedule is defined as the quantity of produce demanded at a variety of prices. A demand curve represents a relationship between the price and quantity bought.

Demand curves assume various shapes, a curve, and a straight line. Whatever their shape, demand curves all slope down wards to the right.

Low of Demand: It states that, the quantity of a good demanded is inversely proportional to the price of the commodity i.e, of the price of the commodities are high less at those win be demanded and when the price is low, each quantity demanded is high.

A simple demand schedule: Price

Quantity (Rice cups)

9p

2

6p

4

4p

7

2p

16

Factors affecting Demand: • Price of the commodity: As the price increases, demand falls and the vice versa.

• Price of other commodities especially substitutes and complimentary goods: When the price of a complimentary good rises, demand for a commodity falls, also when the price of a substitute falls, demand for a commodity falls and vice versa.

• Income of the population. The higher the income of the population, the more the goods they can afford.

• Tastes and preference. Each individual has different feelings about a good or service and is bound to buy what satisfies his/her feelings • Size of the population. The bigger the population the more the goods they can buy.

• Seasonality of production: Some goods are demanded more in specific seasons than in other seasons e.g. demand for meat increases during festive seasons.

• Government policies. E.g. taxation, the higher the taxes, the higher the price and sc the lower the demand for a good • Availability of transport. Transport widens the potential market for a good since the goods can be taken far off markets.

• Price speculation. If the price of the commodity is expected to increase in future, the demand for that product will increase in the present as people stock up the products.

• Nature of the goods. E.g. necessities or luxuries.

Necessities are much mot demanded than luxuries because the former cannot be done away with and the Iater have no effect if unsatisfied.

• Structure of the population. The proportion of the various age groups and sexes in the population determines what to be bought more since each group has its own needs e.g. miniskirts for ladies, walking sticks for ageing people.

• Adverts. The level of advertisement influences awareness about a product and so its demand. Goods that are advertised more tend to have a higher demand than those that are not advertised.

MARGINAL UTILITY: Utility means the amount of satisfaction one derives from an activity. It depends on a psychological approach of an individual and a particular time.

The law of marginal utility states that if a consumer increases the consumption of a given commodity, his satisfaction will fall when compared with other commodities.

E.g. a person buys fruits of a particular type, he gets some satisfaction. In case he again buys others of the same type, his satisfaction declines gradually.

ELASTICITY OF DEMAND: This is the responsiveness of demand to change in the determinants of demand.

Price elasticity of demand refers to the extent to which demand changes when price change.

Price elasticity of demand is defined as the percentage change in quantity demanded resulting from a % change in price.

NB. Point elasticity of demand measures the ratio of a very small change in quantity demanded to a very small change in price.

Arc elasticity of demand measures the responsiveness of quantity demanded to a relatively large change in price. It measures average elasticity over a portion of the demand curve.

The demand may be said to be elastic, unitary or inelastic.

Demand is said to be elastic when a small change in price causes a larger change in quantity demanded and the coefficient is greater than 1. A reduction in price leads to a big increase in total volume.

Demand is said to be unitary when percentage change in price is equal to the percentage change in quantity demanded. i.e. the elasticity coefficient is equal to 1.

An increase of decrease in price has an equal effect on quantity or decrease in price has an effect on quantity demanded and therefore on the total revenue.

Inelastic demand occurs when a fairly big change in price causes a less than proportionate change in quantity demanded i.e. the coefficient is less than 1.

A decrease in price would lead to fall in total revenue.

NB The demand for salt is inelastic because it has no substitute. Almost the same quantity of salt is bought if there is a change in price or not; luxury demands are usually elastic while for necessities it's inelastic.

CALCULATING ELASTICITY 0F DEMAND Example In the month of May, 2007, a tin of maize cost Shs.8000/= and the trader in Kihande sold 20 tins a week. In June, 2007, the price rose to Shs. 12000/= per tin and the traders sold 16 tins a week. Calculate elasticity of Demand.

Factors affecting the price elasticity of demand Availability of substitutes: where close substitutes exist, a commodity will have elastic demand and if close substitutes are unavailable, demand will be elastic.

The degree of necessity of a commodity: Commodities such as salt, paraffin, that are necessities have inelastic demand while luxuries such as clocks, television have elastic demand.

The number of uses a product can be put into: The more the number of uses a commodity can be put to, the greater the degree of elasticity. This is because as the price falls, people demand more of the product and use it alternatively and if price rose, they would cut down their consumption of the product and limit it to the essential use.

Joint demand for commodities that are jointly demanded e.g. shoes and shoe polish, the elasticity of demand for the secondary commodity depends on the elasticity of demand of the primary commodity.

Durability of the commodity: Commodities whose consumption can be deferred e.g. durable goods have elastic demand while perishable goods have inelastic demand.

Addiction and habit: Addictive and habit forming commodities such as cigarettes, and alcohol tend to have inelastic demand.

The level of income of the consumer: Generally, the higher the income of the consumer, the more elastic will be his/her demand for commodities i.e. his demand for the commodity may not be affected by price increases.

Change in demand and change in quantity demanded: Change in quantity demanded.

This is a movement along a given curve caused by a change in the price of a commodity itself.

Change in Demand: This occurs when the quantity demanded at any particular price changes causing a shift of the entire demand curve either to the left or to the right.

It's due to changes in other factors that affect the demand for a commodity other than the price of the commodity itself.

SUPPLY It's the amount of a commodity producers are willing and able to offer for sale at a given price and time.

The supply schedule shows the amount of a good or service that producers are willing to offer for sale at different prices, other factors held constant.

The law of supply: It states that, given other factors held constant, the higher the price, the greater the quantity that will be offered for sale and the lower the prices, the less the quantity that will be offered for sale.

Supply Curve:

It shows the relationship between price and quantity supplied.

Generally it shows that supply increase with increase in price and falls with decrease in price.

Factors affecting supply: 1. Price of the commodity: Other factors held constant when price is high supply is high and the vice versa.

2. Price of other commodities e.g. substitutes and complimentary goods. When the price of substitute X which can be produced instead of Y increases producers may change from production of Y and instead produce X. Thus increasing supply of X and reducing supply of Y. 3. Number of producers in the market: The higher the number of the more the goods produced and the higher the supply.

4. Government policies: Government may encourage the supply of a commodity through subsidies, tax holidays for the producers, and by encouraging its production through the media. It may also discourage the production by increasing the tax burden on the producers, banning its production.

5. Season of the year: Most agricultural goods are produced on a seasonal basis and are hence more available in certain seasons than others.

6. Political stability: The stability of an area affects the ease of production and hence the supply of goods.

7. Gestation period: The time it takes for a good to be produced the longer the gestation period, the lower the supply of the commodity.

8. Cost and availability of resources of production: If the resources of production are available and cheap, more goods will be produced and supplied.

9. Natural hazards; for instance floods, draught, may make production impossible and so lower the supply of the commodity.

10.Goals/aims of the producer; whether profit or charity, goods produced for charity will be put on market even when prices are low, while those intended for profit maximization will not be put on market when prices are low.

11. Speculation; what producers expect in future.

Transport and communication, increase supply since goods is brought from wherever. Level of technology, the higher the level used, the more goods produced hence supply.

Change in supply; As change in supply means that new quantity will be supplied at the old prices Example: Plot the supply curve for the supply schedule below Price

Old supply rice (cups)

new supply rice (cups)

7P

60

90

6P

55

85

5P

40

60

4P

35

55

3P

20

40

2P

15

35

Causes of change in supply: 1. Change in cost of production 2. Change in the technique of production 3. The effect of weather 4. The effect of taxation 5. Producers may consume more of their products. An example is the subsistence farmers.

NB: Inward forward supply curve or backward slopping supply curve, occurs with subsistence farmers.

Elasticity of supply (E.S) Elasticity of supply is defined as the ratio of relative change in the quantity supplied to relative change in the price of the commodity.

The value of the ratio of elasticity of supply is usually positive because generally both price and quantity will go up or down together.

Supply may be elastic or inelastic.

An elastic supply occurs when a change in price causes a more than proportionate change in quantity supplied.

An inelastic supply occurs when a change in price causes a less than proportionate change in the quantity supplied Supply tends to be elastic for: ii) Durable goods. iii) Manufactured goods that require very short periods of production.

Supply tends to be inelastic for the following; i)

Goods that are not durable, i.e. perishable goods such as tomatoes.

ii) Goods requiring a very long time to supply. iii) Goods that entail heavy fixed cost, i.e. goods requiring large capital input.

THE RELATIONSHIP BETWEEN DEMAND SUPPLY AND PRICE (EQUILIBRIUM MARKET PRICE) Equilibrium market price is obtained when the buyers and sellers are in equilibrium (equal). Where the supply curve intersects with the demand curve represents the equilibrium point.

Supply and demand schedule: PX (Shs)

Qnty d’ded rice (cups)

Qnty supplied rice (cups)

1200

100.0

680.0

10000

1400.0

600.0

8000

250.0

500.o

6000

400.0

400.0

4000

700.0

260.0

From the above table, it's evident that only at the price of 8h8.6000=, 400 cups of rice would be demanded by consumers and 400 cups by the suppliers.

Both the consumer and suppliers are in equilibrium. The equilibrium quantity is 400 cups and the equilibrium price is 8hs.6000=.

Demand supply curve for rice showing equilibrium point Price (Shs)

s

12,000

D

10,000 8,000 Equilibrium point 6,000

-----------------------------S

4,000 Equilibrium quantity

D

2,000 0

100

200 300 400

500

600

700

800

Downward pressure on price; when 680 cups of rice a supplied to the market at Shs.1200=, consumes are willing to buy 100 cups. Supply exceeds demand by 580 cups.

Not all the goods are bought, for the supplier has to curtail the price of the goods to avoid spoilage since most agricultural goods are perishable.

Demand deficit; At Shs.400=, the supplier is discouraged from supplying his goods to the market, because of low prices but the demand from the consumer is high, i.e. 700 cups.

The price automatically goes up, i.e. sellers market.

Equilibrium quantities; At Shs.600=, consumes are willing to purchase all the quantities supplied in the market. There is neither surplus supply of rice nor demand deficit.

THE PRODUCTION FUNCTION (PROCESS):

This is a functional relationship between the quantities of inputs of factors of production e.g. land, labour, capital and others, and the maximum quantity of output of commodities/services that can be produced. It's therefore the input/output relationship.

TYPES OF PRODUCTION FUNCTIONS: A production function assumes three forms which may be treated as different types: 1. Increasing returns: In this type, each additional unit of input results in a large increase in output that the preceding unit. It's rare in agricultural production.

2. Constant returns: The amount of the product increases by the same amount for each additional input, that's constant returns to input factor. It's extremely rare in agricultural production.

3. Decreasing (diminishing) returns: Here each additional unit of input results in a smaller increase in output than the preceding unit. It's the most common form experienced in agricultural enterprises, and results into the law of diminishing returns.

Examples: i)

Feeding dairy cows for milk production with varying amounts of feeds.

ii)

Crops response to application of varying amount of fertilizers.

iii) Use of varying units of labour on fixed unit of land.

The Law of Diminisidng Returns: The law states that, if a variable resource is added to fixed resources, marginal output will] eventually decline either in the short run or after a stage of increasing returns.

This law is encountered in practically all forms of Agricultural production and is useful in I determining the rational and profitable level of production.

Example: Assuming a farmer has 10 acres of land for producing maize. In the 1 st year when no labour is put in ploughing, planting, weeding, no maize is produced.

- 2nd year, the farmer works alone and produces l00Kgs. 3rd year, the farmer employed someone and they produced 328Kgs. 4th year, the farmer employed two workers and produced 570Kgs. I In each successive year, the farmer adds the total output to constant 10 acres of land and to total output of maize increases.

NB: Although the total output is increasing yearly, the additional labour input doesn’t double the maize output in the succeeding year but it doesn't happen as it could I assumed.

Hypothetical yields of maize from varying amounts of

a labour

No. of workers

Total returns kgs

Average return per man

Marriage return added by last

1

100

100

100

2

328

164

228

3

570

190

242

4

800

200

230

5

1000

200

200

6

1152

192

152

7

1260

180

108

8

1312

164

52

9

1312

146

0

A curve to show yields of maize with increase in labour 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 1

2

3

4

5

6

7

8

9

Labour input (number of men)

The average return per man is the total return divided by the number of workers.

The marginal return per man is the additional to the return due to the addition of another man.

NB: The total products: This is the cumulative output obtained by successive addition of variable input. It represents the total returns or total physical product.

The Average product: This is the quantity of output per unit of input, or the ratio of output to the amount of input used in producing that product.

Marginal products: Marginal signifies last, extra or additional marginal product is therefore output resulting from unit change of the variable factor input or additional to the product resulting from additional of one unit of the input.

INCREASING RETURNS IN AGRICULTURE As a rule, increasing returns are not rampant in agriculture but are very common in other industries. Some times one finds that continued addition of resources do give increasing return in agriculture. By increasing returns we simply mean that doubling of resources will more than double output.

However, increasing returns do not occur as a result of increasing one's cost.

For increasing returns to operate we need to increase together all or several factors/resources.

NB: For both diminishing returns and increasing returns the rule for the maximization of profits is similar.

It's expressed as follows Increase in output must be greater than price per unit of input Increase in input

price per unit of output

A GRAPHICAL RELATIONSHIP BET'WEEN TOTAL AVERAGE AND MARGINAL PRODUCTS

11 10 9

Stage I

Stage II

Stage III T.P

8 7 6 5 4 3 2 1

A.P

0 -1 -2

2 T.P

4

6

8

12

14

= total product

A.M

= average product

M.P

= marginal product

STAGE 1 (IRRATIONAL REGION) The aim of a very farmer should be to maximize net income while minimizing costs or losses. From the diagram, it's evident that the fanner cannot attain this objective if he operates in stage 1. He has to increase his production at least to the end of this stage.

Total product (T.P.) is increasing at an increasing rate.

STAGE II (RATIONAL REGION)

The diagram shows that profit maximization will occur in stage II and as such, the fanner ought to make all his decisions in this stage.

However, it will not be very easy for a farmer to locate the point of highest profit in stage II. Unless he has some knowledge of the price on the input and the product. In this stage, total product (T.P) increases at a decreasing rate.

Marginal and average products are falling and both remain positive, although marginal product is lower than average product.

STAGE III (IRRATIONAL STAGE)

A farmer should not operate in this stage because at the point where this stage begins, marginal product (M.P), is equal to zero, and hence does not satisfy the role of profit maximization.

Total product and average product are all declining.

OPPORTUNITY COST Opportunity cost is the return foregone when a resource factor is taken for its best alternative use.

Most operators have limited resources in relation to the range of productive opportunities. Use of a resource factor excludes the use of that same factor for another purpose. If maize is grown on area of land which could also be used to grow wheat, one misses or foregoes the wheat that was not produced.

Thus, if a hectare of wheat gives a return of 3million shillings, but a hectare of maize gives a return of Shs.9millions, then the fanner will grow maize. In his case, the opportunity cost of growing maize is Shs.3millions which the farmer would have received had he grown wheat.

Opportunity cost only exists where there is an alternative, If no other crop could be grown on the land, the opportunity cost of growing maize would be zero.

COSTS OF PRODUCTION Expenses incurred in the production process can be divided into; i) Nominal/money costs: These are the monetary expenses incurred by a farm in the production process.

They include wages and salaries, costs of raw materials, costs of machinery and equipment, real depredation costs e.t.c. ii) Real costs: These are the non monetary cost of production e.g. the sacrifices that have to be made by the society and entrepreneur

in order to produce e.g. the time and effort taken to save the capital and opportunity cost.

The costs can further be classified as explicit costs and implicit costs: a) Explicit costs: These are cost directly incurred by the farm. They are easy to recognize and quantify, e.g. the cost of hired labour, power costs, and raw materials. b) Implicit costs: These are costs not easy to recognize and quantify e.g. the cost of self owned self employed resources and services, rent on own buildings e.t.c The money costs of production can also be sub-divided into fixed and taxable costs. i) Fixed costs: These are costs that do not vary with the level of production. A firm incurs them whether it's producing or not. They include, salaries and wages, interest on borrowed resources, insurance premiums etc. ii) Variable costs: These change with level of output e.g. cost of raw materials, labour expenses, cost of fuel etc. Variable costs are also called prime costs or avoidable. iii) Total costs: These are a summation of the total fixed costs and the total variable.

T.C. = TFC + TVC. iv) Average fixed costs. This is the total fixed cost per unit of output. i.e.

AFC = TFC Total output v) Average variable cost: This is the total variable cost per unit of output i.e.

AVC = TVC TP AVC a 1 AP

vi) Marginal cost: This is the change in total cost when output is changed by one unit. i.e. it's the cost of producing one additional unit of output i.e.

MC =

Change in total cost Change in output Marginal cost is inversely proportional to marginal product.

REVENUE:

Revenue is what a film receives from its output. The costs and revenue determines the level of profitability of the firm, Total revenue refers to the total receipts of a firm from the sale of a given quantity of output at a given price.

Average revenue is the equal revenue got per unit of output sold i.e.

AR = Total revenue Quantity sold Marginal revenue: this is the addition to total revenue as a result of selling an extra unit of output.

M.R = change in total revenue Change in quantity

Chapter 8: EFFICIENCY STANDARDS FOR FARM ENTERPRISES Efficiency of any farm business is reflected in the high quality and quantity of output obtained from minimum of low costs inputs. The farm is efficient if it can produce the highest returns possible from the least cost investment in the production process. Any mathematical formulae that a former uses to assess his successes or failures in business are part and partial of the production efficiency.

These are otherwise known as efficiency standards. A farmer uses them as his factors of production have been combined to give him the best returns from the business. Efficiency standards are commonly classified into two categories i.e. economic efficiency and technical efficiency.

Economic Efficiency: This confines itself to the economic performance of an enterprise. It measures the economic contribution of each factor used in production with a view of establishing its maximum average per unit of input, assuming that, other factors which must be combined on their optimum proportions are kept constant.

A beef or pork producer for example will want to know the weight gain of each of his animals per week, reflecting on their food conversion efficiency rills shows him animals' food conversion rate, which consequently indicates how much food the animal converts in a week.

Such analysis enables him to sort out which of the animals are good or poor converters of food and know which ratio is most economical and at what stage.

A poultry farmer would want to know the laying percentage of his birds per day. This can be arrived at by the following formula.

No. of eggs laid x 100% No. or birds per day This kind of measure can be used to compare the economic performance of various enterprises on a farm or the total performance of a farm as whole similar enterprises on neighbouring farms may be compared as well. The type of assessment gives the farmer a picture of how well or poorly his business performs, He can tell whether he is performing below or above average level.

Technical Efficiency: This examines the ability of a factor of production to perform its job properly within the required time to contribute effectively to positive economic returns of business.

It mainly applies to only one of the factors of production, normally market labour and management. The technical usefulness of machines and equipments for example is reflected in how well they enable the business system to run smoothly and fast enough, turning out good quality products of reasonable quantities.

A machine/equipment that is in perfect mechanical condition and well maintained should do good work. B~t the technical efficiency of a machine must always be gauged against its overall economic usefulness in relation to the size and capacity of the business. The decision to acquire a machine or equipment for the farm should first take into consideration its output, productive life span and whether it’s likely to boost the desirable profit at the end of the business season.

For example, it's possible for a machine to be highly efficient in technical sense but may not be economically efficient for the farming business. We know that it’s good to mechanizes agricultural production, yet a new tractor mechanically sound and efficient from

a technical point of view cannot be economically useful if the enterprise is not large enough to make sufficient use of such machine.

Ways of improving production efficiency without incurring extra costs.

There are various ways of which a farmer may improve the production efficiency without necessarily incurring extra costs. They include; i) Following proper crop production practices such as proper spacing, proper and timely control of pests and diseases and weeds, timely planting and proper/timely harvesting etc. ii) Following good animal production practices such as proper selection and breeding, timely and proper control of parasites and diseases, using proper stocking rate, proper feeding, proper housing etc. iii) Efficient use of labour. iv) Mechanization of farm practices v) Adopting new production techniques and methods. vi) Organizing marketing activities in order to realize the highest price possible vii) Revising farm plans as may be deemed necessary. viii)

Selecting proper enterprises.

Efficiency in Farming: This is the measure of the physical and or financial performance of a farm it helps the farmer to identify his weaknesses and strength and so enables necessary recommendation/improvement to be made i.e.

Efficiency in farming measures the SWORT- strength, weaknesses, opportunities, recommendations and threats in production.

Efficiency standards: Expected values or, average figures of output have been obtained through research findings. A Frisian cow is expected to give 40005000Kg of milk per lactation of 305 days; with average good management up to 4000Kg/ha of maize may be obtained.

These are examples of established standards of efficiency with which a farmer should compare his own yields. The farmer may be able to discover areas of weakness within his management and take steps to remedy the loss-making enterprises.

Types of efficiency standards: 1. Partial efficiency standards; In this case, an assessment is made of the efficiency of carrying out a particular farm enterprise. There are two simple ways of comparing yields.

I) Yield index: the efficiency of carrying out an enterprise within a farm is measured by the yield index.

The actual yield from one hectare of cabbages or 80g of canes is compared to the efficiency standard or expected yield. ii) System index: the yield of a particular enterprise is compared with that on a similar farm. For example the number of eggs from 100 layers on farm A is compared with farm B system index for A = yield on farm A x 100.

Yield on farm B If any index is lower than 100% it means that the farmer may have to improve his efficiency. It's imperative that the farmer should always try to improve his own efficiency using his resources that he has instead of competing with his neighbours in bad faith.

2. Overall efficiency: Assessment of efficiency standards can also be done by looking at the farm as one unit. This means that profits from each of the enterprise on the farm are summed up and the average profit per hectare is obtained. When this profit is compared to the amount of capital used, then the returns to capital may be obtained.

The percentage of these returns to capital shows you the overall efficiency of the farm.

Overall efficiency = profit x 100 Capital Farm efficiency assessment should not discourage a farmer but should instead encourage him to improve all the time. The farmer should try as much as possible to improve on his previous performance and in this way improve his efficiency Farmers who always try to produce more than the previous season are referred to as progressive fanners.

Factors that influence efficiency in Farming: Price: Prices offered for goods influence efficiency. More goods are produced when prices are high. Input prices for instance of seeds influence economic returns of farm enterprises and thus farm efficiency.

Management: Good production requires sound decisions at the right time. For instance in crop production, early seed bed preparation, timely pest, and disease and weed control, harvesting at the right time influence efficiency and output. a)For animals; pest and diseases, parasites control, proper diet, leads to high output hence efficiency.

Size of the farm: Big farms have larger returns for each unit of labour employed, land and capital used. This is true for a fanner benefits from economies of scale i.e. utilization of least units of inputs to obtain maximum output However, if poorly run, large scale farms may yield less returns per unit of input than the small scale farms.

Records kept: Record on the farm show the economic status of one's own farm. It also shows which enterprises are paying and those which are uneconomical to run, It makes one to choose the best alternatives.

Chapter 9

RISKS AND UNCERTAINITIES These are unforeseeable and unavailable hazards which face entrepreneurs. They make it very hard for the farmers to accurately predict the out comes from their inputs in the production process.

Risks: These are hazards whose probability of occurrence can be predicted with a certain degree, basing on past experiences and therefore it can be insured against.

A risk is the divergence between the actual and expected results.

Examples of risks include the following; Weather changes, fire outbreak, theft, accidents to employers and employees, pests and diseases, crop yields and health of the farmer or members of his family.

Types of risks: In production process, risks can be classified into two namely; 1. A prior risk: The future outcome is known in advance to have a likelihood of either occurring or not occurring. If you toss a coin, it will come down either head or tail. There is no other possibility. This type of risk does not occur in agriculture. There are always other factors interfering.

2. Statistical risk: This exists when the future can be predicted based on observations made over a long period of time. For example if it's observed and recorded on a number of occasions that the outbreak of pests such as the army worms occur after a pattern of weather, the farmer may predict such out breaks when the weather conditions occur and possibly make arrangements to arrest the situation.

UNCERTAINITIES: These are hazards whose occurrence cannot be predicted by probability estimates and therefore cannot be insured against.

Uncertainty is the state of imperfect knowledge. Examples of uncertainties include: Price uncertainty; prices of farm produce change quite frequently.

It's not possible for the farmer to ten at what price he will sell when he is planting.

Yield uncertainty: Dictated by factors of production.

Government policy: such affect agriculture directly or indirectly and abrupt changes are not advance policies can be made on; trade, prices, what crops to grow, subsidies on farm inputs, tax assessment, level of land and order etc.

Technological changes: These may make machinery, crop variety input inevitably absolute rendering the local fanners' production procedures irrelevant and uneconomical, thus sending them out of production, Breach of contract e.g. contractors cane out grower may fail to fulfill a promise of supplying sugarcanes to the factory, Management policy: The decisions of managers may not remain constant situations may arise if the managers and workers are in conflict or the land lord changes his policy over tenureship.

Transport uncertainty.

Insuring against risks and uncertainties: To minimize the possibility of production plans being upset farmers often insure against risks and uncertainties in the following ways; 1. Insurance: Farmers pay a relatively small premium to an insurance company from which the unfortunate few losers are compensated to the value of their loss; payment of the insurance premium transfers

the risk of loss from the producer to the insurer, e.g. it can be losses due to natural hazards or any other production risk.

2. Producing on contract: An agreement is made for a farmer to produce a specified amount of produce to be bought by the buyer at a guaranteed price. The uncertainty of price reduction is removed for the farmer but he losses the chance to gain from higher prices.

3. Flexibility: Farm structures and buildings should be designed in such a way that production can be changed from one product to another depending on the profitability of the enterprise. e.g. with minimal changes a building could be used for production of poultry, pigs or wiener calves.

4. Diversification: This is the production of different commodities on the same farm a: the same time. This spreads the risks of loss over several products thus reducing total loss 5. Liquidity: It refers to the case with which farm assets e.g buildings, produce, stock. etc. may be converted into cash and invest in a more profitable enterprise. F or instance of a farmer anticipates a fall in price for eggs, he can sale off all his laying stock.

6. Selecting the most certain enterprises: Farmers should engage in those enterprises which carry less risk especially if they are less experienced. e.g. Farmers may grow certain crops not because they are the most profitable to grow but because they are the most certain to be grown and ensure food security and some income. E.g.

Cassava is commonly grown because it is hardy and is a famine crop.

Indigenous cattle are preferred to exotic if there is a fault in management.

7. Government support: Government can support the farmers to protect them against risks and uncertainties through giving them rice guarantees. Fixing minimum price for produces, sponsoring credit and ensuring employment.

8. Building own equity: Farmers should try to have a high net capital so that even if there is a failure in one year, the farmer can still continue farming.

9. Input rationing: Farmers should rationalize the inputs such that all are not used at ago "not putting eggs in one basket". This means that even if there is a problem in one season, the farmer can continue producing because he will have some inputs in stock., 10. Using relevant technologies: Such as irrigation, to overcome drought, spraying with insecticides, pesticides to avert insects and pests, using quick maturing seeds varieties etc.

Chapter 10

DIVERSIFICATION AND SPECIALIZATION

Diversification It's the practice of growing several crops on the farm or keeping different types of livestock on the farm or growing crops and keeping livestock at the same time.

Benefits of diversification: Farmers spread the risks of loss over many products such that failure in one may be covered by gains in another.

Farmers are more dependent and self-sustaining than those who specialize since they provide a wider range of products for themselves.

The farmer is in position to generate income throughout the year because of producing and selling a variety of products in different seasons of the year.

It provides employment opportunities throughout the year regardless of seasons because the activities are more spread throughout the year. Also more avenues for employment are created in the diversified activities.

It widens the export base of a country, generates more income and thus enables a country to stabilize Balance Of Payments.

It ensures a stable economic growth rate for a country since it offsets the effects of commodity price fluctuations.

The stable incomes and increased sure flow of foreign exchange into a country person's coffers enables long term planning of the economy.

It's a step towards achieving a balanced regional development and an equitable income distribution. Each region and individual produces a wider variety of products and hence higher incomes are earned.

There is integration of farm by-products e.g. crop residues may be used to feed livestock and poultry litter may be used to improve soil fertility.

Disadvantages of Diversification: It's more difficult to select and manage a combination of enterprises than it is to manage a single or a few enterprises.

It requires a skilled labour force to manage the diversified enterprises.

Pests and diseases may spread from one enterprise to another if they are related.

It's more difficult to organize the marketing of several products than it is to set up a network to market one product.

SPECIALIZATION This is where the resources are concentrated in the production of one commodity or relatively few commodities.

It's very common where the products have a competitive relationship There is usually a surplus of a particular commodity off the excess.

Specialization is usually done in those commodities with the least opportunity cost and those which use available resources intensively.

There is generally a low level of specialization in developing countries because the level of productivity is generally low hence real incomes and hence a low market demand.

Advantages of specialization:

1. There is mastery of the job due to the frequent repetition of the tasks.

2. There is increase in the quality and quantity of produce due to the mastery of the production process. Less time is then spent per unit produced.

3. It creates the need for trade to dispose off the surplus and this promotes co-operation and interdependence between people and countries.

4. Wastage is reduced as the resources are put to their best use by the skilled workers efficiently.

5. Specialization facilitates mechanization machines suited to the tasks at hand are developed and used.

6. There is less fatigue since the physical and mental stress will be reduced by repetition and mechanization of tasks.

7. Increased productivity leads to reduced cost per unit of output hence reducing the price consumers have to pay.

8. There is easier marketing of the one of a few products produced since specialized lines e.g. automated vendor machines can be developed to market a single product.

Disadvantages of specialization: 1. There is overdependence on others to provide what one has not specialized in.

2. People who specialize in a given commodity suffer more incase of price fluctuation.

3. It may lead to overproduction of a commodity hence forcing the price of same commodity down.

4. The monotonous repetition of tasks leads to boredom.

5. It limits the range of commodities available in a locality.

6. Occupational mobility of labour i.e. changing from one job to another becomes difficult.

7. Workers may become inefficient on the job as the sense of responsibility is hampered by overspecialization i.e, complacency sets in.

8. Resources are un-utilized e.g. labour force ploughing implements e.t.c. for a. part of the year if one specializes in crop production.

9. Income may not be constant throughout the year since many agricultural products are seasonal.

Chapter 11

FARM MANAGEMENT It's the practice of applying knowledge acquired in order to produce efficiently.

It also involves application of the principles of economics i.e. using the cheapest means of production to get maximum profits.

Farm management may also be defined as the science which applies scientific laws and principles to the conduct of farm operations.

Farm management is applied science; it's also pure or fundamental science.

A good farm manager makes use of his knowledge of these various disciplines in arriving answer to his management problems.

The farm manager is basically a decision-maker and the function of decision-making is very important since a wrong managerial decision can throw a would-be successful farmer out of business.

The following steps are important in decision making: 1. Developing ideas and making observations. This essentially entails definition of the problem.

2. Analysis of observations, including information and reformulation of problems and ideas concerning their solution.

3. Decision making.

4. Acting on the decision once it has been made. (Implementation) 5. Risk bearing for any outcome.

The main functions of the farm management are: 1. Planning: This is the task of putting down the necessary activities to be done setting up the objectives and layout of the necessary structure for operation.

2. Organizing: This is the task of collecting and getting all the materials and resources together such as inputs, labour, etc.

3. Co-ordianting: As a business, all the areas of the farm should be co-ordinated especially the manpower, marketing and transport.

4. Directing the business: It's the task of supervising activities to maintain uniformity.

5. Controlling activities: It's the task of safeguarding against risky situations in order to avoid losses in the business.

6. Record keeping: Proper records must be kept for all the activities regarding all crop and animal production, tools and equipment and finance.

7. The most important factor in farm management is decisionmaking: Decisions are made when planning, organizing, recording, etc.

There are two categories of decisions made in farm management; and these are; i) Operational decisions. ii) Organizational decisions.

Operational decisions are daily/ frequent decisions laid from time to time during the process of production. E.g. Decisions on the type of crop to grow, fertilizer to use, when to market etc.

Organizational decision: Is a major decision made while planning. It's concerned with; the overall organizations of the farm business i.e. they are long term decisions. This decision may not be changed within a short time; it's made by referring to previous info, data, examples are; the type of building to set up, the amount of land to cultivate.

However, in low developing countries most farms are too small to employ managers and farm management is carried out by the owner of the farm himself.

A guide to decision making in farm management: i) Allocation of resources: The allocation of resources on a certain enterprise on the farm depends on the nature of the soil and the entire farm e.g. some areas on the farm are more fertile than others, while others may be swampy. Therefore it's advisable to choose crops suitable for those areas. A swampy area may be sued for forestry or a fish pond. ii) Selection of crops: One should consider the marketability of the crop and the growth requirement and also the market demand. The use of the gross margin analysis will help to determine which crop to grow. The fanner should also consider the labour requirements of growing the crop. However, the selection for animals is not the same as for the crops initial cost required, the ease of selling the products, the knowledge/skills of caring for animals.

Hi) Selection of method of production: The farmer should use the method which is suitable and not complicated. The farmer can gain skills and confidence in managing the farm e.g. if the farm uses hired labour, the people should have skills and knowledge used in production. If this is not the case, the labour should be trained. iv) Making production program/plan: The farmer should use the experience from other farmers and when planning, the plan should show how the resources will be put together.

The plan should also consider the possibility of changing from one enterprise to another when the price changes or when conditions are not favourable, i.e. the plan should be flexible.

NB: Farm planning should be done in time especially for crop production because the yields will fail if crops are planted out of season.

TOOLS OF FARM MANAGEMENT The tools of farm management are;

Farm records; Farm records involve writing down and studying all the activities regarding receipts and expenses, labour, loses and profits, sales of products which are on the farm. This information is written in different books.

Importance of Farm records: 1. Farmers are required to keep records for such records clearly show the income earned from the farm and on this the tax assessment authorities can determine the amount of tax the farmer will pay.

2. Farm records will enable the farmer to know what each enterprise contributes to the overall progress of the farm.

3. Farm records will enable the business is progressing or lagging behind from one year to another.

4. Records enable a fanner to obtain loans from lending organizations/individuals legal tenders.

5. Good records will enable the fanner to locate weak points in his business.

6. Farm records show past events on the farm. They show how particular enterprises have performed up to date. Farm records are therefore important for planning for the future.

7. If kept consistently records can show the physical input and output relationship. It's therefore possible e.g. to know the yield potential of a crop grown in a particular plot of the expected rate of gain from productive livestock on a farm.

8. Financial records enable the farmer to monitor profits and losses.

E.g. in times of economic depression, profits dwindle and if expenditure is not cut down accordingly, the farmer may end up in financial bottlenecks.

9. Good record kept can reflect the true value of the farm should one decide to sell off the farm; besides the expected trend of the performance of the business can only be accessed through properly kept records.

10. Farm records are important in the settlement of an estate after the death of the farmer.

This avoids the disputes and misunderstandings among relatives who may have to share the farmer's assets.

11. Records also help in proper breeding of livestock by showing individual animal lineage/percentage performance.

12. For fanners who carry out their activities on a co-operative basis, records enable them to share profits and losses.

13. Records also enable the farmer to remember his debtors or creditors and facilitate payment promptly.

14. Records show the efficiency of the farmer, they are used in calculating the efficiency of the farmer.

15. In some countries, record keeping in the fanning business is legality.

TYEPS OF FARM RECORDS: Inventory record Health record Breeding record Production records F arm dairy Cash record Financial records.

INVENTORY RECORD:

Here the farmer lists everything he owns. Examples: Buildings, feeds, land, livestock, produce in store, miscellaneous supplies, growing crops as well as all the money he owns. The farmer also has to estimate their value in monetary terms.

Inventories should 'be taken twice in a year at the beginning and at the end of the year, though it can be taken once 2. year with experience.

THE FARM DIARY A farm dairy usually consists of hypothetical prospective payments and receipts which a farmer anticipates in the running of a particular farm for a year.

PRODUCTION RECORDS: Records of crop animal production are kept for crop production; the following items are included; • Date of planning • Acreage • Variety of crop planted.

• Inputs • Yields in kind • Cash return and • Field map.

An example of crop record Material applied Date

Field No

Acreage Kind of crop

Kind

17/04/07

1

0.4

Maize

Labour Longe cultivation 5

18/05/077 1

0.4

Maize

17/09/0

1

0.4

Maize

Production

Varity Amount (shs) planted value

Labour weeding

Longe 5

Labour Longe harvesting 5

15

15000=

15

10000=

15

20000 =

Kind

Amount Value

maize

400 bags

800000=

Livestock production records are usually more detailed than crop records. Items recorded include; Total production on an individual animal basis, weights at various ages, rates of gain, breeding program (Pigs, goats,e.t.c.), disease detection etc.

BREEDING RECORDS: This includes accurane of heat period, date of service, calving date, lot at birth, sex and subsequent weight, infertility cases etc.

An example of a breeding record; Pig record' Sow NO

Date of services Furrowing date and Boar No.

12

3/02/07 Boar No. 1

20/06/06

No. of pigs

No. weaned

12

19/08/07

24/02/07

Remarks

Eight hogs to be sold Two gilts kept for breeding

Boar No. 2

HEALTH RECORDS: These include; occurrence of diseases and treatment, vaccination programs, drugs and medicines administered etc.

THE CASH RECORD: This refers to records of financial transactions, receipts and payments.

These receipts and payments are recorded in a cash book.

The receipts and payments of a farmer are of two kinds:i) Those made by cheque and those made in cash. Transactions made by cheque should appear in the main cash book while those made in cash are recorded in the petty cash book. The main cash book. The farmer should record the receipts on the left hand page, while he records payments made on the right. On the whole a simple cash book can be divided into four columns.

Column 1: Date on which the farmer transacted the business.

Column 2: The source of the income received or the purpose for which payment was made.

Column 3: The amount of income received.

Column 4: The amount of payment made.

A Simple cash book Date

Amount

of

income Amount

of

payment Amount of payment made

particulars

received

07/02/07

100 dozens of eggs sold @ 300,000= 3000 a dozen

………………………

09/02/07

10 bags of feed purchased

----------

250,000=

300,000=

250,00=

Total

FARM ACCOUNTING: Farm accounting is closely related to the keeping of farm records. Accurate farm accounts will enable the farmer at the end of the farming season to know how much profit he has made or how much loss he has incurred.

The records necessary to enable a farmer to calculate the annual profit and loss account and balance sheet of the farm include the following: Records of receipts and payments Statement of debtors and creditors at the beginning and the end of the year (financial year) Annual valuations Profit and loss account Depreciation.

THE TRADING (PROFIT AND LOSS ACCOUNT):

This shows the income and expenses incurred on the farm during a stated period of time, usually one year.

It also shows how the inventory changed- crops, supplies and livestock during the same period of time and the estimated depreciation on all the depreciable assets i.e. buildings, machines and equipment.

An illustration of a profit and loss Account Opening valuation + purchases and expenses on debit side

Closing valuation + sales receipts on credit side

FEATURES OF A PROFIT AND LOSS ACCOUNT:

There must be a heading, stating the duration of the on the account.

Purchases and expenses are entered on the left side while sales and receipts are entered on the right side.

Expenses or receipts on individual items summed up and entered as a total The value of all items on the farm at the beginning of the year is entered as opening valuation under purchases and expenditure. If the farmers had to buy the farm at the beginning of the year, that would be his expense.

The value of the assets on the farm at the end of the year is known as the closing valuation. Those are entered under the sales and receipts because if the farmer should off his farm at the end of the year, this would be the amount received for it.

There is net profit or net loss. A net profit is made when sales and receipts exceed the purchases and expenditure and net loss when purchases and expenses exceed receipts.

Example I: Use the following information to construct a profit and loss account for Mr. Waiswa's mixed farm for the year ending December, 31 st 1996.

Sales of poultry

500

Opening valuation

12000

Purchase of seeds

280

Purchase of fertilizers Rent

200 200

Sales of grain

1200

Sales of vegetables

50

Closing valuation

10,000

Hired labour

250

Depreciation

50

Interest on loan

40

Repairs and maintenance

130

Purchase of chicken

80

Sales of milk

600

Purchase of calves

100

Purchase of feed stuffs

250

General expenses

100

Mr. Waiswa's trading account for the year ending 31st Dec. 1996.

PURCHASES & EXPENSES

SALES AND RECEIPTS

Opening valuation

12,000

Poultry

500

Seed

200

Grain

1200

Fertilizer

200

Vegetables

50

Rent

200

Milk

600

Labour Depreciation I Interest on 10a.lJ.

250

Closing valuation

10,000

50 40

I Repairs and 1faintenance

130

Chickens

80

Calves

100

Feeds

250

Expenses

100

Total expenses:

13,600

Total:

13,600

Total sales:

12,350 + 1,250

Total:

13600

Exercise: Construct a profit and loss account for Mr. Kiwalabye's farm enterprises for the year ending 2005 using the follo'XL11g data: Sales of cattle

400,000

Sales of milk

1,000,000

Purchases of drugs

125,000

Sales of beans

400,000

Purchases of cattle

700,000

Wages to workers

1,500,000

Sales of cabbages

700,000

Debts payable

400,000

Purchases of fuel

396, 000

Purchases of seeds

30,000

Opening valuation

2,000,000

Debts receivable

300,000

Rent for land

90,000

Purchase of poultry

600,000

Closing valuation

2,000,000

Purchase of feeds

405,000

Sales of calve

300,000

THE BALANCE SHEET: This is a statement drawn up to show the financial stand of the fanner on a particular date. It shows the liabilities and assets of the farm on a particular date.

LIABILITIES: These are the debts and obligations i.e. all that the farm should pay to other people. They include; Loans Money that the fanner has to payout but has not yet paid- debts payable. Overdraft at the bank Depreciation (the loss of value of a commodity with time).

NB: Liabilities appear with time on the left hand side of the balance sheet.

ASSETS: These are the items on the farm and their value. They include the following.

The value of machinery, crops, livestock, equipment, house e.t.c.

The money that the farmer hopes to get from goods sold but not get paid for i.e. debts received.

Any pre-paid expenses i.e. any goods/services paid for but not yet delivered.

NB: Assets appear on the right hand side of the balance sheet.

The total on both sides of the balance sheet must balance.

Where the value of the assets is greater than the liabilities, the difference called the Net worth or Net capital is recorded under liabilities i.e. that would be the money the farm owes the farmer. If the liabilities are greater than the value of assets. The difference is recorded under assets. The farmer would then be said to be bankrupt; that's even if he sold off all his properties, he would not be able to pay off his debts.

Example: Construct balance sheet for Alpha farm as at 31 st Dec. 2003, using the following data.

Cash in Bank

8,000

Bank overdraft

15,000

Debts payable to Coop Union 15,000 Debts receivable

2,000

Value of land

40,000

Value of sheep

5,000

Value of cattle

20,000

Value of coffee

45,000

Long term loan

50,000

Value of buildings

45000

Value of machinery and implements 35,000

A BALANCE SHEET FOR ALPHA FARM AS AT 31ST (/12/2003 Liabilities Overdraft

Assets 15,000

Cash in bank

80,000

Debt payable to Crop 15,000

Debts receivable

2,000

Long term loan

Value of land

40,000

Value of sheep

5,000

Value of cattle

20,000

Value of coffee

45,000

50,000

Value of buildings 45,000 Machinery & equipment Total liabilities

80,000

Net Worth

+ 192,000

Total

272,000

35,000

Total assets 272,000

Total

272,000

EXERCISE Construct a balance sheet for Mr. Kato's farm as at 31 st (Dec. 2006 using the following data.

Value of implements 1,250,000 Debts payable

320,000

Value of crops

300,000

Value of livestock 300,000 Bank overdraft 1,450,000 Cash in bank

288,000

Debts receivable 462,000 Depreciation

60,000

Value of buildings 2,000,000 Pre-paid expenses 600,000

IMPORTANCE OF A BALANCE SHEET(s) 1. They enable the farmer to acquire loans as they show the net worth of the business.

2. They help in assessment of tax liabilities.

3. They help in planning and decision making as they enable the farmer to see whether the business is viable or not 4. They enable the assessment of the value of the farm in case of sale.

5. They enable the sharing of profits and losses in case of cooperative farmers.

6. They enable companies to negotiate for mergers, contracts, etc.

7. They are a legal requirement for public companies and have to be published annually.

DEPRECIATION: It's defined as the distribution of the cost of capital items over the number of years we expect those patterns to serve us.

Farm implements decline in value even when not used, soil improvements also depreciate.

CONCEPTS IN DEPRECIATION:

1. Useful life: refers to the number of year’s equipment, machine can conveniently serve us without any trouble.

The useful life for particular farm equipment will depend on many factors e.g. user experience with the equipment, conditions under which the equipment is used, work “signed to the equipment, etc.

2. Salvage value: It refers to the sum of money realized from depreciable item when the owner wishes to discontinue its use chiefly on account of age METHOD OF CALCULATING DEPRECIATION: There are three methods of calculating depreciation; i) The straight line method ii) The declining balance method iii) The sum of the years-digits method.

THE STRAIGHT LINE METHOD: Here you have to determine your expected salvage value, deduct it from the cost of the item and then divide the product by the useful life. E.g. A farm implement casting £8.800 has a salvage value of £800 and useful life often years. Determine its depreciation = Cost of implement - salvage value Useful life = £ 8.800 - £ 800 10 = £800 per annum Depreciation = £800 per annum This means that an allowance of £800 must be made every year for depreciation purposes.

THE DECLINING BALANCE METHOD Here we do not deduct the salvage value before calculating the depreciation. Under this method we often use twice the rate of the straight line method.

THE SUM OF THE YEARS - DIGITS METHOD: This method is the same as the declining balance more than the straight-line method. Here we use a different fraction each year and apply it to the cost of the property. But we have to deduct the salvage value. Thus with a tractor which costs £4400 with a useful life of 1 0 years and estimated salvage value of £400 the depreciation rates for the ten years period will be as follows Ste 1. Sum up the years; 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55.

Cost minus salvage value = £4400 - £400 = £4000.

First year depreciation = 10 x 4000 = £727.5 55

1

2nd year depreciation = 9 x 4000 = £654.5 55 1 3 rd Year depreciation = 8 x 4000 = £582 55

1

PRODUCT-INPUT RELATIONSHIPS Input- Input Relationship: This is the way factor inputs are combined inputs may be combined in the following ways; 1. Fixed proportions: In this combination, there is no substitution of the inputs involved. For any production to take place, both inputs must be present in the same proportions. There is no common example.

2. Constant rate of substitution: In this one, input factors substitute one another at a constant rate for each level of output regardless of the ratio of the input factors used. This is called perfect substitution e.g. Maize and sorghum as live-stock feeds.

3. Varying rate of substitution: In this factor, factor inputs substitute one another at varying rates. It's the commonest in form of substitution in agriculture. Examples include; i)

Hay and grain in feeding livestock,

ii)

Nitrogen fertilizers and phosphoric fertilizers in crop production.

iii) Proteins and carbohydrates for feeding livestock.

PRODUCT - PRODUCT RELATIONSHIP: In this product-product relationship, a producer is interested in the effect, that's production of one product has on the production of alternative product e.g. He may be producing two products YI and Y2 using the same resource Xi. The amount of X, that can be used to produce YI is relative to the same amount of Xl that can be used in producing) Since this is true, it follows that the amount of YI that can be produced depends on the amount of Y2 that's produced: YI = f (Y2) The following are examples of product-product relationship.

1) Joint products: Here an increase of one product automatically leads to increase in other using the same resource.

OR; this is a situation where by a farmer aims at producing one product, but automatically gets another product e.g. Milk and butter, cotton and cotton seed oil, beef and hides. Here there is no substitution of one product for another in the short run, Let a given quality of one is produced, the amount of the other product is fixed by nature. With joint products, there is no economic decision to make with respect to product combination and two products may be treated as one for the purpose of economic analysis.

2) Competitive products: Two products are competitive if an increase in production of one leads to a reduction of the other in a given level of

resources. In this situation one product must be given up in order to increase the other. Therefore the marginal rate of substitution between the product is negative. For example, crops and livestock using the same land are competitive products. An increase of an area under crops leads to decrease in the amount of grazing area and thus number of livestock kept. Both products are competing for the same resource i.e . land. Another example, wheat and maize, if the wheat acreage is increased, then the maize acreage has to be reduced.

3.

Dairy and beef; if the number of dairy cattle is increased in the farm, there should be a reduction in the number of beef cattle.

Complementary products: Two products are complementary when an increase in one product leads to increased production of the other. A good example is maize and beans. The nitrates formed by beans are taken up by maize thus increasing maize production. Therefore production of Y I can be increased by the production of Y 2 at the same increase at the same time.

The marginal rate of substitution is positive.

At a certain point, this complementary relationship must end and the two products become competitive.

4) Supplementary products: Two products are supplementary, if the production of one product can be increased without affecting the other i.e. increasing/decreasing the other's production of Y, (cattle) can be increased without the production of Y, (sheep) in the range land.

A farmer can grow an intercrop between the rows of a main crop such as beans or cassava in a coconut field or Irish potatoes between citrus fruit trees.

If the levels of production increase the product will seaze to be supplementary and will become competitive, because they will have different demand on the available resource.

OPTIMUM PRODUCT COMBINATION: When two products are competitive, there is need to make rational decisions.

It's better to produce only one product. If fails to do so, economic decision will only be made when supplementary and complementary products become competitive.

A graphical presentation of joint, competitive complementary and supplementary products

In the complimentary range, Y I increases from A to H while Y2 simultaneously increases From O to C. After point B, Y 2 increases while Y I Decreases.

Production of Y 1 can be increased without affecting the production of Y 2 in the range A - B while output of Y 2 can be increased without affecting the output of Y 1 in the region C -D.

Chapter 13 FARM BUDGETING A budget is an estimate put on paper to determine the economic results of changes in costs and returns over a given period. It's also a document which shows a farm's expected income and expenditure.

Budgeting can also be defined as a process by which a farm operator carries out an economic analysis of a farm to locate weaknesses, works out an improved plan designed to remedy these weaknesses and thereby maximize profits.

Making budgets for enterprises; Aids to budgeting; The farmer may use the following data in making a budget. a) The farmer's own data: The farmer should be encouraged to use the figures he obtained from his own farming records. However, this has some draw backs; A few farmers keep records, if the records are incomplete.

New farming entrepreneurs have no such records. b) Data from a group of farmers: In case of co-operative societies, a farmer who is planning to start a farm similar in some respects to those of co-operative farmers should benefit from the records kept.

However, one has to be cautious there might be some differences. c) Census data and experimental data: Uganda beaureu of statistic (UBOS) and research stations have enough information regarding, crop yields per unit area, market and farm prices on various areas, modern agronomic practices and vet practices that are suitable for production.

However, such information has some set backs Such results obtained do not include economic components, e.g. the data will show expected yields but not the production costs.

Produce under experiment is often higher than under normal conditions. d) Data prepared by farm management experts: Such data furnish the most reliable estimates and farmers are advised to rely heavily on this source.

TYPES OF BUDGET: There are three types of budgets, namely; i) The complete budget ii) The partial budget/break-even budget and

iii) The financial flow/cash flow budget.

1. The complete budget: A complete budget covers every item of expenditure and income. Estimates must be made where the variable and fixed costs which are likely to be incurred.

A complete budget is necessary where; a) The farmer wants to start a new farm. b) Where both the direct costs and the fixed costs are all likely to be affected.

In preparing a complete farm budget, the following steps are vital; Formulating of farm goals- the farmer states why he IS setting up the farming business.

2.

Take the farm inventory- items included here are; farm buildings, land and improvements, breeding stock, human labour, animal power, capital and liabilities.

3.

Show how the various resources are utilized e.g. land resources, labour and capital resources.

4.

Find the gross production. This refers to the total value of the assets in the farming emanating from the crops, livestock and other incomes.

5.

Preparation of a statement of expenditure and income. The fanner can be guided by the existing records kept.

6.

Analysis of the input-output relationships that exist on the farm.

7.

The farm manager has to find out the weaknesses on the farmstructure/weaknesses diagnoses, economic use of; land, buildings, equipment, labour and livestock. Operational weaknesses are indicative of poor managerial efficiency.

8.

Correcting the operational and structural weaknesses in order of priority.

9.

Making a number of alternative farm plans and choosing one for adoption.

10. Putting the best chosen plan into operation and supervising its implementation.

11. Evaluating the results; Evaluation is the measure of how far the fanners' goals have been achieved.

The break-even/partial budget:

It's a budget drawn up to estimate the effect on some measure of farm profit of a prop1``osed change in farm organization or methods affecting only part of the farm, A partial budget for a minor change: Example: The manager of a livestock farm may wish to make an addition of 2000 point-of-lay pullets to his farm. In this case, the building may be enough, so the labour.

Some of the major things he may have to consider are; the cost of the pullets, feeds and veterinary expenses, aq,vocate a formula which can help the farm operator to prepare a partial budget.

Consider the following points; Additional receipts: These are expected additional returns from products sold and services rendered as a results of the changes under consideration.

Reduced costs: These are estimates of annual costs which will no longer be incurred if the changes are made.

Total credits: These are additional receipts plus reduced costs-(Add 1 + 2) Additional costs: These are costs that would occur in a year's business directly as a result of the change.

Reduced receipts: These are returns that will no longer be received after the change has been made.

Total debits: This is the sum of the additional costs phis reduced receipts.

(Add 4 + 5) Change in net income: This is the difference between total debits and total credits. (6 - 3) In preparation of a partial budget, one has to take not of the costs namely; i)

Fixed costs 1

ii)

Variable cost Discussed already

The cash/Financial flow budget: It's a statement of projected farm payments and farm receipts associated a particular farm plan.

A cash-flow budget is necessary to ensure that adequate funds will be a . le for the operation of the farm for a given period of time.

A simple hypothetical illustration of a financial flow budget forecast for a lOyear period.

Chapter 13 AGRICULTURAL CREDIT This is borrowed capital used by fanners to finance their fanning business.

It's credit offered in cash or kind to fanners.

TYPES OF CREDIT: Credit may be classified as short term, medium term and long term.

Short term credit: This is intended for working capital, i.e. buying fertilizers, seeds, spraying, food stuffs, hiring machinery and any other factor input. It's normally payable within a year.

Medium/intermediate term credit: this is used for minor land improvements e.g. fencing, purchase of machinery and livestock. It's normally payable over a period of 2 - 15 years.

Long term credit: This is mainly used for purchase of land or major improvements on land e.g. soil and water conservation works, and land reclamation. It's normally payable over a period of 15 - 30 years.

Capital may also be classified as hard or soft credit: Hard credit is that given against substantial security, usually immovable assets such as land, soft credit is offered without security or against little security including movable assets such as machinery.

SOURCE OF CREDIT Government schemes e.g. "Entandikwa", prosperity for all "Bonna bagagawale" Agricultural finance corporations Commercial banks Co-operative banks Co -operative societies NGOs, e.g. (CCF) Christian Children's Fund. License money lenders Micro-finance institution (e.g. ENCOT, PACT, SOMED, FAULU) etc.

Self financing Informal credit-from friends and relatives Importance of agricultural credit: 1.

It enables fanners to finance their activities throughout the production season i.e. paying salaries, wages and procuring other farm inputs required in production.

2.

It provides capital for building up an enterprise.

3.

It enables the farmer to cope up with seasonal patterns of production e.g. there are seasons when the farmer harvests and could have some income and other seasons, there could be no harvest hence no income.

4.

It enables the farmer to cope with total crop failure by giving the farmer the capital to continue farming or to survive on during hard times.

5.

Credit can also be used for financing the production process i.e. from seedbed preparation to marketing the produce.

6.

It may also be used for unproductive ventures e.g. personal consumption, building a house.

Categories of credit: Consumer credit: This is used to cater for the living expenses of the family.

Production credit: This is used for investing in the production of goods.

Development finance: This is for introduction and expansion of fanning and processing plants.

Interest: This is the fee charged for use of borrowed capital. It's calc percentage of the total credit (principle) and usually paid annually.

as a

Factors affecting the interest rates: 1. Demand for the credit: The higher the demand the higher the rate.

2. Supply of the loanable money: The higher or the supply of e oney that can be lent out, the lower the interest rate.

3.

Cost of administration: The higher the cost of administration e higher the interest rate.

4.

Losses due to default: The higher the losses due to default e higher the interest rate because the lender would want to recover the money and also because the loan would then be classified as risky.

5.

Decline in the value of money (depreciation), the higher the rare of depreciation in the economy, the higher the rate of interest.

6. Interest paid on the deposits that finance the loans: fest loanable money is got from deposits of people who save with the bank/micro-finance institution. This money has to accrue interest for the depositors.

7. Government policy: Government may cause a rise or fall in interest rates through raising or lowering the interest rate at which it lends to the banks.

For particular loan; the interest changed would depend on; Size of the credit

Type of credit, i.e. whether short term or long term Credit worthiness or collateral security of the borrower LOAN APPLICATION: All information concerning the loan should be gathered and sent to the loan agency. The application form should show the following. i) Personal data i.e. name, marital status, list of dependants and permanent address. ii) Economic status i.e. type of business, size of the farm, location of the farm, land tenure and the crops cultivated or animals kept. iii) Loan requirements i.e. the amount required, period of repayment, purpose of the loan, security offered, loan guarantor, etc.

NB:

All the information must be confidential.

ASSESSMENT OF THE LOAN APLICATION: Assessment is an economic appraisal of the loan application. It must cover the following; I. The economic situation of the farmer, i.e. compare his assets and his liabilities.

II. The purpose of the loan; production loans are usually given priority over consumption loans.

III. The purpose of the loan in relation to the requested amount. The amount should be appropriate to the purpose of the loan. Insufficient credit will endanger the success of the project while excess will lead to wastage of funds. Also the period of repayment of the loan should be related to the purpose of the loan. The duration of the loan should be adjusted according to the purpose of the loan and the liquidity of the applicant.

IV. The intended contribution of the farmer to the project: The loan is easier to give to a farmer who has a substantial stake in the project.

V. The security offered/collateral: the collateral offered should be equal or greater in value than the loan requested for.

VI. The capacity of the applicant to repay the loan: This is estimated basing on the assets and liabilities of the applicant.

VII. Previous loan history: Loan agencies are more reluctant to lend money to those they have previously dealt with on loan issues WHY FARMERS SOMETIMES FAIL TO REPAY THEIR LOANS

1.

High interest rates: These make the amount to be repaid by the farmer much higher than the profits that the farmer may make from the use of the loan.

2.

Inflation: This may depreciate the value of money lent making it both unable to cover the intended project and also very hard to pay back especially of the loan was quoted in foreign currency that appreciates as the local currency depreciates.

3.

Failure of production e.g. of crops or livestock: The farmers projects may fail e.g. due to bad weather, pests and diseases etc.

4.

Fall in prices/poor market: The farmer may produce and yet fail to find the anticipated market due to changes in tastes, fall on price etc.

5.

Unsuitable conditionalities attached to the credit: Some credit institutions attach unpalatable restrictions on the usage of the credit and so restrict the farmers flexibility in respect to market conditions.

6.

Unrealistic repayment schedules: The 101m period may be too short or too long making the farmer overloaded in repayment (of the loan.

7.

Political instability: This may lead to destruction of the farmers assets and make it very hard for the farmer to produce thus rendering him incapable of repaying the loan.

8.

Poor culture of loan repayment: Many African farmers have a poor attitude towards loan repayment and do not want to repay even when they are able to.

9.

Low levels of education of the farmers hence low powers of negotiation and poor record keeping: This makes it difficult for the farmers to know whether they are making profits or losses and so make adjustments.

10. Poor extension services and so poor choice of business venture: The farmers therefore make the wrong business decisions and so are not able to make enough profits to service the loan.

11. Miss-appropriation/on miss-use of the loan: Many farmers miss-use the loan especially if it's in cash e.g. a farmer may use a loan intended for boosting productive activities for introducing another wife.

12. Inadequate credit: The credit may not be enough to cover the entire production process. The farmer may not be in position to implement his pr on plans to his satisfaction.

MEASURES TO MAKE AGRICULTURAL CREDITS MORE EFFECTIVE: 1.

Agricultural credit should be offered as part of an integrated agricultural development program. The program should include extension services to ad rise farmers on how to use the loans.

2.

Credit programs must be accompanied by measures to develop a commercial attitude to farming and define encouragement of saving in the farming sector.

3.

Agricultural credit in LDCs must be sponsored by government primarily as a "public service" and iip investment for agricultural development rather than as a banking business enterprise. This is because many commercial banks shun lending to agricultural production because it's too risky.

4.

Training programs for agricultural credit personnel, co-operative society's staff and supervision should be provided regularly to enable them handle farmers appropriately.

5.

Where possible and necessary agricultural credit should be provided in. kind mainly to inexperienced farmers.

6.

Agricultural credit institutions should have an active credit policy that takes the credit to the farmers rather than the farmers to come to them.

This is to increase awareness of the availability of credit and to help overcome farmers' conservativeness.

7.

Security demanded by the credit institutions should be within the farmers' means.

8.

Insistence on immovable assets as security is likely to limit the facilities to the relatively wealthy. Credit should therefore be soft.

9.

All agricultural credit institutions in the country should work together and coordinate their activities to avoid duplication of efforts. They should monitor their with a view to identifying the strength and weaknesses and so improving the credit system.

10. Government should provide other services such as adequate transport and communication infrastructure, security, health services, etc. to complement agricultural credit programs and ensure success of the credit program.

11. Credit institutions should ensure regular visits to the farmers to supervise the utilization of the loans.

12. Loan recovery programs should be properly enforced to cut down on defaulting the interest charge should 110t be too high to encourage farmers to borrow money from credit agencies.

13. Loans should be administered on time. Paper work should be kept at minimum to save time.

14. There should be moves to ensure provision of inputs to the farmers at fair prices.

15. The marketing of farmers' produce should be improved to be able to dispose the increased output that will arise from the increased supply of capital.

16. The credit institutions should give a reasonable grace period to the farmers and also give a suitable loan repayment schedule to farmers.

17. Where possible the credit to be given to the farmer can be given in installments appropriate to the level of production at specific times for instance; ploughing, buying seeds, weeding, etc SUBSIDY SCHEMES: A subsidy is an aid to sustain or supplement the business. They may be in form of reduced prices for inputs or payments of an amount of money over and above the market price of the output usually by the government.

Subsidies are incentives to farmers and are often applied discriminatively.

Importance of subsidies: They stabilize the prices of agricultural products and stabilize farmer’s incomes.

They encourage people to move to rural areas and so reduce movement of people away from rural areas.

It may influence the pattern of investment towards the subsidized products.

The subsidy may stimulate the improvement or initiation of the use of complimentary natural resources e.g. a successful fertilizer subsidy programme will increase yields and so make it necessary to improve on storage. Transport and marketing facilities thus stimulating them

Chapter 15 MARKETING OF AGRICULTURAL PRODUCTS This refers to all the activities involved in transforming raw agricultural products into consumer goods. Therefore it concerns the activities from the point of production to consumption.

MARKETING FUNCTIONS: Marketing involves several activities that may be referred to as functions and these include; 1.

Buying and assembling: It's the process of purchasing and gathering the small lots of products from individual farmers or suppliers and bringing them to a central store.

2.

Transporting: It involves movement of products from one place to another.

Transporting occurs in all stages of marketing. Therefore there is need for good roads, accessibility especially for perishable goods.

3.

Storage: Products need to be stored from the harvesting time so that they are made available to consumers. In times of scarcity, storage is necessary because some products cannot stay longer in an open environment. The storage period depends on the climate, conditions, nature of products, and types of packaging. Therefore there are different storage facilities and materials like Silos for grains, cribs, bags, tins, packets etc. respectively.

4. Processing: It's the process of changing the form of the product to suit the needs and taste preference of the consumers. Some products have to undergo changes before being presented to the consumer processing can be simple or complex, e.g. milk has to be cooled or pasteurized to make cheese, ghee etc.

Importance of processing It prolongs the useful life or shelf life of a commodity e.g. the pasteurization of milk.

It eases digestibility e.g. the grinding of maize into flour, maize brand.

Reduces wastage due to spoilage It extends the period of availability of the product and so reduces fluctuations in supply. It therefore reduces the risk of famine.

It helps to destroy, kill toxins in the products e.g. heating of Soya beans destroys the trypsin

It adds value to the products by improving their quality in terms of colour, taste, flavour etc.

5.

Grading: This involves sorting products into uniform lots according to co lour, quality, shape, flavour, degree of ripeness, etc.

6.

Standardization: This makes sure that the products conform to certain established specifications of quality and quantity; the body responsible for that in Uganda is Uganda National Bureau Standards.

Importance of standardization: Enables the establishment of methods for inspection and control to ensure that the products are safe for consumption It avoids exploitation of consumers by producers and helps to keep the price of a commodity constant in different places.

1. Selling: It involves activities that attract buyers and sellers. Therefore it means giving information about the product; advertising the product and pricing of the product.

2.

Financing: It is a function of paying for the services and for the goods.

Capital is always required in financing all activities of marketing e.g. in processing etc. Therefore services must be paid for.

3. Risk bearing: In the marketing process, someone has to bear risks.

This means one has to bear the problems and uncertainties that may arise.

This is because it takes time from production to supply of the goods to the last person the consumer.

4. Collecting and analyzing marketing information: It's the process of getting information about market prices, market supply, and demand in ad . . on to where to buy or sell.

This information can be used to improve the value of the produce or reduce the costs of marketing.

PROBLEMS OF MARKETING AGRICULTURAL PROD"GCTS: 1. Bulkiness: Most agricultural products are heavy and large in quantity; compared to their value. This causes problems in transportation and storage of the products especially when the costs are based on dry weight.

2. Perishability: Most agricultural commodities especially fruits, vegetables, dairy products, etc. can easily rot because they contain a lot

of water and are very nutritious. They can\\not be stored for a long period of time. They need to be consumed in a short time.

3. Inadequate storage facilities, agricultural products are difficult to store because they are bulky and they are also perishable. Therefore might require large facilities such as the silos which increase the cost of marketing.

4. The scattered nature of farmers/small independent producers: Agricultural production is done by many small scale farmers who are scattered all over. This makes it difficult to buy, assemble and fix prices and it's also difficult to control the quality.

5. Seasonality of production: Agricultural products are supplied in bulk during harvest. And in very low supply in later stages. Therefore, the supply charges affect prices at harvest time and after stages.

6. Long gestation periods: They take period to mature. This makes it difficult to increase, decrease, or modify the quality and quantity of produce once planting has been done. Readjustment to market conditions is therefore slow. .

7. Variable quality of agricultural products: This is due to instabilities and uniformity in the climatic conditions, handling of products, pests and disease attack etc. the quality varies thus making standardization difficulty.

8. Synthetic substitutes: Some agricultural products have synthetic/artificial substitutes e.g. rubber face competition from rayon, polyester, nylon, plastics, etc.

9. Political instability: This sometimes makes some parts of the country in accessible and so cuts the potential market in those areas.

10.

Poor transport facilities: Most agricultural productive areas in Uganda are remotely located with insufficient transport linkage routes.

11. Inadequate- processing facilities: Most agricultural products are sold off in their raw form in which they attract the least price and are prone to spoilage.

12.

Inadequate storage facilities: Since most agricultural products are seasonal and perishable, they required proper storage facilities.

However, such facilities are not locally available and if any inadequate.

13.

Inadequate market information: There is poor collection and dissemination of market information as regards prices, availability of market etc, the farmers hence produce what may not be required and so fail to

market their produce. However, of recent dissemination of information on produce has improved through mobile telephone services.

14.

Limited price elasticity of demand: Most of the agricultural products are foods whose demand is price inelastic because once one is satisfied, he will not take in any more even when in abundance or at a low price.

15.

Low income elasticity of demand: As one's income increases beyond a certain point, the proportion of that income spent on agricultural products falls while that spent on manufactured goods increases.

MEASURES TO IMPROVE AGRICULTURAL MARKETING 1.

Construction of proper storage facilities: These aid collections and assembling of products. They also help to stabilize supply and reduce losses due to spoilage.

2.

Establishing processing plants: These improve the quality, reduce bulk and increase the longevity of the product. It increases value and reduces spoilage of the products.

3.

Establishment of proper transport infrastructure: This helps to transfer the products from areas of plenty to areas of scarcity. A good transport network facilitates the products to consumers when they are still fresh.

4.

Establishment of cooperatives: They enable the farmers to contribute resources in order to gather information, construct storage facilities, organize transport and bargain for the market collectively.

5.

Institutionalized market research and dissemination of market information: This helps to transmit the wishes of the consumers to the producers. The producers then know what is required and at what price and are then able to make correct decisions.

6.

Proper extension to farmers: The information given to farmers by extension workers enables them to produce goods that are acceptable and would attract more consumers and so fetch a higher price.

7.

Provision of credit facilities: The marketing process requires financing for it to be more effective. Credit facilities would enable assembling, transporting, processing, and packaging of produce.

8.

Market diversification: Measures should be taken to open up new markets to consume the excess production and so stabilize prices.

9.

Trade contracts between producers and consumers: These ensure that there is a steady market as the prices are determined in advance and it also reduces exploitation by middlemen.

MARKETING CHANNEL: This is the process that the product are taken when moving from the producer to the final consumer. The channel may be centralized or decentralized. • Centralized channel; is the one in which all the farmers' products are brought together 111 one area or group. • Decentralized channel: In this channel, there is no specific place which is a \producer.

MARKETING AGENCIES/INSTITUTIONS/ORGANIZATIONS: These are individuals or organizations which carry out one or more marketing functions. They are: 1. Itinerant traders: This is a class of people who move from place to place to buy agricultural products from farmers. They buy all kinds of products mainly cattle, sheep, goats, fruits, vegetables, etc. They sell their products to other agencies. Such as whole sellers, processors or stockists.

They perform the main function of buying, assembling and transporting.

2. Processors: These are companies/organizations which transform raw materials into" more useful forms. The organization may be private; or public e.g. grain milling companies, British American Tobacco (BAT). Tea processors and sugar milling companies, etc. products from processors are usually packed and labeled.

3. Whole sellers. They usually buy goods in large quantities from the processors or manufacturers small scale traders. They re- sale the products to the small traders, consumers or other processors 4. Retailers: They buy products from whole sellers, and sell in small quantities to consumers. Examples, Groceries 5. Brokers and commission agents: These are middlemen or agents who work on behalf of other businessmen and they are paid a fee/commission for the work. They are not the owners of the commodities but may have knowledge about the marketing and therefore link the buyers to the sellers. However, commission agents buy the goods and sell them on behalf of the agents while brokers bring buyers and sellers into contact.

TYPES OF MARKETS: A market is a place where buyers and sellers meet and carryout trading business or it's an area where in which exchange of goods and services take place.

There are several types of markets, namely;

1.

Local assembling markets: It's the most common type of market found in rural areas. There is a particular place and days where buyers and sellers assemble. The selling and buying takes place by auction or by private negotiation.

2.

Central wholesale market: It's a market developed to supply urban areas. They provide goods where retailers can buy in bulk or big quantities and shelf in their shops in towns or villages. These markets are located in places which are easy to reach and have good roads.

3.

Commodity exchange markets: It's a market where goods and services are not physically brought for sale but the goods are described though the media e.g. on the internet, Newsletters or prints. The interested buyer can get information and make an arrangement to pay for it and the sellers arranges to supply. This marker is common in International Trade; ecommerce.

4. Retail market: It's a market which is found in a convenient place where the buyer can make their own choice. There are often many sellers and many goods, from different sources.

SOME TERMINOLOGIES IN MARKETING: 1.

Market Survey: In any production process, it's necessary to plan how the products will be marketed. This is done in order to avoid the risk of producing too little or too much for the market or producing what's not required by the market. Therefore there is need to carryout market survey by asking the following questions. a) What to produce? This is determined by the consumer's demand. There are some products which are ready to market than others. b) Where to sell? The producer should look for where the price is best. This requires sufficient information about market prices. c) When 'to sell? Most agricultural products are seasonal. Therefore at harvest time, supply is high and prices are lower. Therefore the producer should store the products when prices are low and sell when prices are highest. d) How to sell? Marketing of products can be done directly by the producer or through commission agents. The producer gets less profit if the products are sold through agents.

2.

Marketing information: This is information concerning the market situation. It includes information about the product or goods to sell, the price,

conditions for selling, how to get to the place and where the commodity is found. All this information is in form of advertisement. Therefore the buvers can obtain information in form of order but also the buyers can advertise" their interests in buying commodities in a similar way. Therefore market information makes it easier for both buyers and sellers to plan. This makes better choice in business.

3. Marketing Margin: This is the difference in prices between the first buyer and the last buyer. This occurs because there are services provided by the marketing agencies between the first and last buyer. Each of the agency assumes ownership of the goods before the selling.

4. Marketing Efficiency: This is the movement of goods from the producer to the consumer at the lowest cost possible. Therefore, where the consumers can get the lowest price for any commodity of the same quality.

The marketing efficiency is described as 'high' and high prices for a given commodity of the same quality. The efficiency is described as 'low'. This is because; very high prices in the market discourage buyers.

5. Marketing performance: This is an indication/measure of the marketing efficiency. It's an assessment of how well the process of marketing is carried out. E.g. A buyer will want to know how quickly and efficient the products are collected and put in one place or how attractive the products are. This will determine whether the marketing is performing poorly or well.

TRADE LIBERALISATION: It refers to a situation where the marketing process is allowed to operate freely i.e. when the forces of demand and supply can operate with freedom e.g. in determining prices.

Advantages of trade liberalization: There is free entry and exit of goods and services or factors of production in a ' liberalized environment.

It encourages producers to look for where to sell their products at the best price.

It. gives a variety of products for the buyer to choose from.

It encourages the production of high quality goods and services.

Because of trade liberalization, it has caused competition between the buyers and seller due to a free enterprise economy. As a result, the following market structures/conditions have developed.

1. Perfect competition: A state of perfect competition exists when no single buyer or seller can by his or her own actions, alter the market price.

Chiefly because, the buyer purchases and the seller provides only an insignificant proportion of the total market produce Characteristics of perfect competition: i) Homogenous products; The products here are the same and as such no seller has advantage over the other. ii) Perfect knowledge: Buyers and sellers have full knowledge of the ruling market prices and these market prices are strictly adhered to.

Many buyers and sellers: Here a state of atomistic competition is said to exist and it is assumed that there is no collusive agreement among buyers or sellers.

Utility and profit maximization: Here it's assumed that buyers purchase their needs in such a way as to maximize satisfaction whereas sellers are their goods with the sole aim of maximizing profits. v) Resources are free to enter or to quit: It's assumed that productive resources are free to move into or leave any industry at will.

Imperfect competition: This is said to exist when the entire supply of any specific product in a unit of time is controlled by one seller or a group of sellers who have some agreement among themselves.

Characteristics of imperfect competition: i)

There are few suppliers and buyers.

ii)

The suppliers present different products and of different quality.

iii) Only a few suppliers are allowed to sell their products. iv) Each supplier meets different costs of production.

Monopoly A monopolist means a sole seller who has little or no competition.

Monopolies are few. They may be caused by the grant of patent rights (copy right) e.g. Oil producing and exporting countries (OPEC).

Monopsony: This means a sole buyer characterized by several sellers. A firm which has exclusive rights to purchase some raw materials stands a good chance of influencing the market price for that product e.g. the Nigeria produce marketing board has sole monopsony of the country's agricultural export crops e.g. palm oil, cocoa, palm kernel, etc.

Oligopoly:

Is a market condition where there are few sellers and these deal with a particular commodity and sell in bulk e.g. cement manufacturers, cigarette producers.

Oligopsony: This is where there are several sellers but very few buyers. Here the buyer can easily influence the price.

Chapter 16 PRICE FLUCTUATIONS AND STABILIZATION: Price fluctuations are sudden changes that occur in the price of agricultural products. Price of agricultural products often fall and rise greatly.

Causes of price fluctuations in Agricultural products: 1.

Inability to predict accurately the final output: Agricultural production depends on natural factors such as weather, diseases and pests over which producer have little control. There is then a very large divergence between expected output and real output.

2.

Long gestation period: Production of agricultural commodities requires relatively long period of time compared to industrial goods, besides that, little can be done to change the quantity of output once the crop has been planted. This makes their supply less elastic and can't respond adequately to changes in price in the short run.

3.

Inelastic demand for agricultural products: Many agricultural products are food stuffs whose consumption can't be increased significantly even when prices are low.

4.

Perishability: Most agricultural products can easily rot and are not easy to store to enforce by regulation of supply.

5.

Lack of alternative uses of resources used in agricultural production: The favourable climate and conducive adaphic factors used in agricultural production have very few viable alternative uses.

Therefore farmers may have to keep producing agricultural products even when the prices are very low for lack of a better alternative.

6.

Seasonality of production: This creates a surplus of the products in some seasons and a shortage in others. The situation is worsened by the Perishability of the products which make them hard to store to even out supply. Prices will then fall during harvest and rise during other seasons.

7.

Large number of small-scale producers: These producers can not influence the market in their favour. Besides that, most of the producers are illiterate and cannot agree to determine the price. .

8.

Bulkiness of agricultural produce: This makes the transportation of products from area~ of plenty to areas of scarcity difficult. Hence lower prices and higher price respectively,

9.

Agricultural products form an insignificant part of manufactured goods: E.g. rubber forms only a small proportion of the total price of a car. Thus it's possible for the price of a car tyre to rise substantially without affecting the price of a car.

10. Weak commodity agreements in producer countries: These have low bargaining power as compared to highly organized buyers in the developed countries e.g. the European Economic Commission (EEC) countries. The weak commodity agreements cannot properly regulate supply and are prone to violation.

11. Variable quality of the agricultural products: Due to changes in weather, pests and diseases attack, poor post harvest handling etc, the quality of the products keeps varying and this may cause changes in price or rejection of some of the products by some markets.

THE COB WEB THEORY: This illustrates how prices of agricultural products can fluctuate because of the unplanned variations in supply and because of the difficulty of altering this supply in the short period, causing cyclical fluctuations in price of goods.

The Cob Web theory is based on the following assumptions; i. Producers do not get discouraged/frustrated by low prices but continue producing as they hope for better prices. ii. Produce is not stored and all output is sold at the ruling market prices. iii. Producers base their production plans on the ruling market prices. iv. Producers never get wiser.

A DIVERGENT COB-WEB

Effects of Price...Fluctuations

1. Unstable incomes to the farmers whose income depends entirely on agricultural products that are sold. Consequently farmers cannot plan their output to meet their domestic expenditure and consumption.

2. Farmers are discouraged to borrow since they are not sure of their next income.

This discourages installation and establishment of capital assets.

3. Price fluctuations increase the costs of production due to risks and uncertainties encountered during production which necessitates insurance.

4. Interest payments on borrowed capital becomes a burden to the farmer if he is confronted with price fluctuations. When prices are low many farmers may not pay promptly.

5. Price fluctuations can put a severe strain on the country's Balance Of Payments. The country may be forced to institute counter measures to correct. Such imbalances in form of; currently devaluation import restriction, all of which affect the living standards and disrupt the development plans for the victimized country.

6. Political instability; in Developing countries where farmers are not informed, blame the government for low prices.

7. They directly lead to rural-urban migration as the youth to flee the poverty stricken rural areas when prices of agricultural products fall.

8. Unemployment arises in the agricultural sector and other related industries e.g. the agro-based industries.

9. Declining prices force government subsidize the agricultural sector thus increasing government expenditure against the background of falling revenue thus increasing budget deficits.

10. They discourage production of the commodity whose prices have fallen.

This may be a problem especially where the commodity in question is essential food stuff or a potential famine reserves crop METHODS OF INCREASING PRICE FLUCTUATIONS 1.

Introduction of buffer stocks and price stabilization fund. Buffer stocks are products kept in store and only released when there is an acute shortage likely to cause a big increase in price.

Also during bumper harvests some of the products are withdrawn from the market and stored. This maintains the price level.

Price stabilization is money put aside to buy off excess supply of a commodity from the farmers at fair price instead of allowing the price to fall

excessively. e .g. National cereal board on Kenya and the strategic grain reserve in Tanzania which boast.

2. Establishing processing industries: These improve the quality and longevity of the products. They also reduce the bulk of the products and ease transportation to the markets.

3.

Establishment of proper transport infrastructure, to transfer products from areas of plenty to areas of scarcity. .

4. Diversification of the agricultural activities: farmers: Farmers should be encouraged to produce more than one product such that fall in the price of one item can be compensated by revenue from another item so that the overall effect will be a leveling of prices and income.

5.

Market diversification: Measures should be taken to open up new markets to soak up the excess production.

6. International commodity arrangements should be set up to monitor and regulate supply of the products and increase the bargaining power of the producers. They can also control the prices of certain commodities on the world market e.g. International commodity corporotation set up in 1945.

7. Industrialization: This diversifies revenue for government and avoids over dependence on revenue from agricultural goods.

8. Technological and scientific innovations, within the agricultural sector to put factors of production under more control and the effects of natural calamities. Quick maturing varieties also help to reduce the gestation period and increase the elasticity of supply.

9. Improvement on the quality of production, proper extension to farmers to increase the quality of their products reduce price instability since the prices of high grade agricultural products tend to be more stable than those of low grade produce.

10. Institutionalized research and dissemination of market info. This helps to study the market trends and make fairly accurate predictions on the positions of demand and supply so as to adjust production accordingly.

11. Organization of marketing: Farmers should be encouraged to organize themselves into co-operatives or government can set up marketing boards to bargain better and establish better marketing infrastructure.

Chapter 17 FARMING ORGANIZATIONS CO-OPERATIVES: These are business organizations formed by people for the purpose of providing goods or services for themselves. They are owned and controlled by those who formed them and these people are entitled to share in any profits made.

CO-OPERATIVE PRINCIPLES: These are the guidelines on which co-operatives operate. They include the following; 1. Open membership: Membership should not be restricted, voluntary and open to any one of good characters as well as being of legal age and resident within the geographical areas of the co-operative.

2. Democratic control: All members must have an equal say i.e. one man one vote.

Management is done by elected officials.

3. Limited share holding: Absolutely, equal amounts in money should be contributed to stop richer members trying to control the society e.g. In Uganda dividends on fully paid up capital is paid at a rate not exceeding 10% per annum.

4. Share of profits: Profits which are not used for investment are paid to members in proportion to the amount of trade each member has transacted through the society.

5. Promotion of Education: Co-operatives should promote the education of their members.

6. Cash dealings: Dealings of a co-operative should be on cash and services given by the co-operative should be at cost.

7. Restricted business: Trade is restricted to members who undertake to deal with the co-operative.

TYPES OF CO-OPERATIVES 1.

Consumer co-operatives: these distribute goods to the consumers at the minimum possible price.

2.

Savings and credit co-operatives: These encourage members to save and obtains.

3.

Producer Co-operatives: These are owned and operated by producers to collect, process, transport and market their products.

4.

Marketing co-operatives: These collect produce from growers and transport and market it.

5.

Building Societies: These mobilize savings and distribute loans to the members for construction of decent houses and other productive investments e.g. the Alliance building society, Uganda building society.

Importance/benefits/advantages of co-operatives: Co-operatives have the following benefits; 1.

Farmers are in position to produce and market their commodities at low costs because they benefit from the economies of scale.

2.

Co-operatives make it possible for the members to obtain profits which would otherwise go to private individuals.

3.

Co-operatives increase the bargaining power of the farmers, and they may be able to get higher prices for their productive.

4.

Members can get marketing services such as transportation and proper storage.

5.

Where co-operatives liaise with marketing boards, members may gain from profits obtained by selling their products to overseas markets. Such profits are higher than local profits.

6.

Individual members are able to participate in business and are therefore exposed to commercial life through co-operatives.

7.

Co-operatives lead to development of rural leadership and co-operation especially where they exist.

8.

Co-operatives provide technical advice to rural farmers as regards basic agronomic and livestock rearing techniques through extensionists.

9.

Due to the provision of storage facilities and capital, they reduce price fluctuation by buying and storing' the excess produce and later remitting some of the profits to the farmers.

10. Members share overhead costs, e.g. depreciation on machinery, house rent and permanent labour.

11. They increase the standards of living by providing education to members income and employment in the rural areas.

12. They reduce rural-urban migration as they are oriented to developing the rural areas.

13. They lobby the government on behalf of the farmers to provide the necessary services like transport infrastructure PROBLEMS FACING CO-OPERATIVE: 1.

Low levels of literacy tend to hamper effective communication within the co-operatives. This makes democratic control difficult.

2.

Poor management and accounting due to lack of education and training among employees. Members are not willing to pay high remuneration which would attract qualified personnel.

3.

Disloyalty among members. There is delay in repayment of loans or paying up of share capital.

4.

Seasonal operation: Most co-operatives operate on a seasonal basis yet official are paid throughout the year. This is uneconomical because capital is encroached upon.

5.

The existence of statutory marketing boards has in some cases deprived co-operatives of business.

6.

Delay in payment for farmers produce due to bureaucracy and lack of ready finance.

7.

Corruption and embezzlement of funds by some officials leading to irregularities in the transactions of the co-operatives.

8.

Co-operatives often deal in specific products and neglect other so they lack flexibility and initiativeness hence some discouraging some farmers to produce.

9.

Lack of transport: Most co-operatives do not have enough vehicles to transport farm produce 10.

Lack of capable personnel due to the low salaries/wages usually paid.

SOLUTIONS TO PROBLEMS FACING CO-OPERATIVES IN E. AFRICA 1.

Carrying out seminars and in service sources to improve on the management.

2.

Education of the farmers to ensure that they can adequately participate in the running of the co-operative.

3.

Fighting political instability, sectarianism and tribalism to ensure that appointments are made on merit and there is no in fighting.

4.

Encourage diversification to ensure that there is infrastructure owned by the co-operative is not idle for part of the year.

5.

Giving credit to co-operatives to enable them to transport the farm produces and finance their other operations.

6.

Building the necessary infrastructure to enable the co-operatives transport the produce to the storage or market centres.

7.

Providing transport facilities e.g. lorries to enable the co-operatives transport the produce economically.

8.

Giving storage support programmes e.g. building large stores for the societies.

9.

Facilitation of the farmers to interact with other farmers through trade fairs, conferences etc.

10. Provision of extension services to increase the quality and quantity of farm produce and so ease its marketing.

11. Subsidizing farm signpost supplied through the co-operatives to make them relevant to each farmer since they would be able to get inputs at prices lower than the market prices.

12. Expansion of markets both local and external for broader markets of farm produces e.g. through PTA and COMESA. 13. Strict anti-corruption legislation to reduce corruption and embezzlement of co-operative finance.

Factors necessary for success of Co-operatives: • Adequate funds/finance to invest in the business.

• Adequate volume of business to benefit from economies of scale.

• Clear goals and objectives known to all members.

• High level of entrepreneurial skills and ability. Freedom froJ.n interference by government.

• A good political climate/political stability to facilitate production.

• High level of education for all members to create equality.

• Good will from all members • Equitable members.

MARKETING BOARDS:

These are statutory organizations set up to buy specific commodities from the producers, process them and resell either to external markets or to local consumers. They were established mainly after World War II. Reasons for establishment: 1.

The need to establish producer prices in the face of fluctuating world prices caused by the war.

2.

To promote expansion of cash crops e.g. cotton and coffee in Uganda so as to reduce the vulnerability of the economy to world market conditions arising from over-dependent on one cash crop.

3.

To strengthen the bargaining power of the producer because these boards provide for collective bargaining.

4.

To increase state participation in economic affairs and public investment 80 as to prevent a recurrent of economic regression.

Advantages of marketing boards: 1.

They encourage production by giving price guarantees to farmers before commencing production activities.

2.

They remove the exploitation of farmers by private dealers who may pay less to the farmers.

3.

Farmers who are away from 'urban centres where demand may be restricted can still receive fair prices for their products.

4.

They ease tax collection by government since they collect all the produce and the tax is collected at one point.

5.

Boards are usually in a better position to stabilize the flow of essential food stuffs at reasonable prices. This is because they have better transport and storage facilities.

6.

Marketing boards are in a better position to control the quality of products both for local consumption and for export.

7.

They offer specialist or technical services which an individual farmer could not pay for.

8.

They can enforce quarantine measures against pests and diseases out break when necessary.

9.

They provide planting materials and inputs e.g. seeds, pesticides, fertilizers etc.

10. They carryout ventures e.g. research that the individual farmers may not afford.

11. They reduce the farmers' marketing costs to the farmers' advantage.

12. They offer export licenses' and therefore fight malpractices e.g. smuggling.

13. They may process the produce and thus increase its quality/value/while creating jobs.

Disadvantages of marketing boards: 1.

There isn't competition since the board is a monopoly hence no efficiency.

2. The boards are located in specific places, which cause location imbalances as the board sells off its stock.

3. The board may fix prices out of equilibrium because of lack of adequate market information.

4.

5.

6.

Lack of managerial ability on the board leading to mistakes in the boards operation e.g. produce may be stored for too long or selling may be wrongly timed.

Political influence may have a toll on the board.

They are antagoniotic to International Monitory Fund (IMF) and world bank policies of liberalization of trade.

Marketing boards in Uganda: They deal in the marketing of agricultural produce-crops.

Examples are: 1.

Produce marketing board

2.

Lint marketing board

3.

Uganda tea authority

A. Coffee marketing board.

The produce marketing board: It deals in the marketing of the following food crops; beans, maize, sorghum, peas, ground nuts and finger millet.

Functions: Buying these crops from the farmers. Transporting and storing these products Packing these produce into convenient units where necessary.

Fixing a price at which the produce is bought from the farmers and the price at which it will be sold to consumers.

Administration of prices control in respect to these commodities.

Ensuring that the quality of the crop is maintained if not improved. It is done through grading and encouraging farmers to improve the quality of these products.

The Link marketing board (LMB): The Lint marketing board works mainly through co-operative societies.

Responsible for buying cotton from farmers and transporting it to ginneries Functions of LMB: i. Buying all cotton ling and seed from co-operatives at a price determined by the government. ii. To control the quality of cotton produce within the country by offering attractive prices. iii. To recommend to government the prices to be aid to producers of cotton. iv. Arranging the sale of cotton lint to outside markets-exporting the cotton. v. Establishing the crop licensing of ginneries.

The Uganda Tea Authority (UTA): It was established to organize the marketing of the crop especially to outside markets.

Functions: i. To buy all tea products and processed by private or government tea factories. ii. To fix prices to be paid to the producers through liaison with government. iii. Pack, transport and arrange for the selling of tea to outside markets. iv. To encourage the production of high quality tea by giving attractive prices for high quality tea.

The Coffee Marketing Board (CMB): Functions: i. To organize the buying of all Uganda coffee from farmers or cooperatives. ii. Process coffee, where necessary so that it's in a form that can be marketed either outside or internally.

iii. Advise the government on the prices to be paid to farmers for their coffee. iv. Control the quality of coffee by inspecting the quality of coffee produced and processed by private individual. v. Organize the marketing of coffee aboard.

Chapter 17 LAND TENURE This refers to the possession of rights to the use of land.

TYPES/SYSTEMS OF LAND TENURE: 1. Private ownership (also called freehold, landlordism, or individual ownership). An individual owns the land and can get a title for it. He may allow other people (tenant) to settle on his land such people may pay rent to the landlord e.g. Mailo land in Buganda.

Advantages of individual land ownership: It is an incentive to farmers to improve the land. Land consolidation and farm planning become easier. It settles inheritance disputes.

It safeguards the position of the local people/community ifland is in short supply. If the holder has a land title he can use it to get a loan.

Disadvantages of individual ownership: Since the land can be sold and bought at will, tenants may be turned out with no means of livelihood.

It encourages the hoarding of land.

2. Leasehold: In this system, the government is the sole owner of the land. It's responsible for distribution and supervision of land use. The individual applies for a lease often granted for a specific period say 49, 99 or 999 years. After this period, the lease may be renewed or terminated depending on the government policy.

Advantages: Since the farmer has a lease, certificate, he is able to obtain loans from the bank.

3. State ownership: Here land belongs to the state and no one has a right or title over the land.

Individuals can be allowed to settle in an area but they can be evacuated at any time e.g. crown land in Buganda Kingdom.

4. Communal ownership/customary land tenure: Land does not belong to any body/ individuals b*t to easily defined sections of the community such as a clan. Every member of the clan has a right to the use of land but the land is neither bought nor sold.

Advantages of communal ownership:

Every member of the community has access to the use of land.

There is no hoarding of land i.e. unused land is re-allocated by the community.

Disadvantages of communal ownership: There is no incentive to the farmer to improve land. Land is often overused i.e. overstocking, overgrazing.

It's not possible to use this land as a security to obtain loans dues to absence of land titles. .

Increasing population leads to fragmentation as the clan/tribe tries to give everybody some land.

5.

Co-operative land tenure:

Land is owned by a group of people who organize themselves into a cooperative society. All the people in the group have a title deed jointly.

PROCEDURE OF ACQUIRING LAND

Land can be obtained through; • Inheritance • Buying • Leasing • Renting Borrowing/begging from a land lord joining a co-operative society

LAND FRAGMENTATION CONSOLIDATION AND REGISTRATION: ii)

Land fragmentation:

Is a state where a farmer has several small pieces of land scattered in different places instead of one large piece of land.

Causes of land fragmentation: Shifting cultivation that makes it inevitable for the farmers to have small plots that they can conveniently clear and look after.

Traditional system of inheritance where each heir is entitled to a share of the parents' land.

Increasing population pressure on a limited amount of land.

Accumulation of land as in the case of farmers with limited capital who wish to increase their land holdings, purchasing small pieces of land in different places at different times.

Poverty; lack of money to buy large chunks of land.

Communal land tenure system where fanners cannot command large chunks of land since each member of the community is equally entitled to the same piece of land.

Disadvantages of land fragmentation: Movement from one plot to other wastes the farmer’s time It makes mechanization difficult due to the frequent necessity of turning in the small plots and the high expenses of fuel in driving too far off plots. This generally reduces the productivity of the land.

There is no efficiency in farming e.g. fencing cannot be carried out.

Farm planning cannot be carried easily.

The farmer cannot restrict his grazing and this encourages communal grazing and its related problems of overgrazing and soil erosion.

Weeds, pests and diseases are difficult to control because the farmers' holdings are heavily surrounded by other peoples' holdings. The neglected plots nearby that belong to other people may act as sources of re-infection.

Agricultural extension services are not very easy to out because farm operations cannot be centralized. iii) Land consolidation: It is the pooling together of small plots of land so that the farmer has one large piece of land instead of many small plots.

Advantages of land consolidation: It saves a farmer's time since movement is minimized.

It makes mechanization easy and so can increase farm productivity.

It makes farm planning easy It increases efficiency in farming e.g. fencing can easily be carried out.

It reduces theft of farm produce since supervision is done efficiently.

It enables timely operations of farm activities. E.g. land clearing, planting etc.

It makes the provision f extension services easy since the farm can be well planned and farm management can easily be centralized.

Control of pests, diseases and weeds is easier since the farmer can restrict his activities and enclose them by fencing, and so reduce the spread of weeds, pests and diseases from neighboring plots. iv) Land Registration: Is the process of getting an official document from the government called a Title Deed to establish ownership Advantages of land Registration: • There is security of tenure.

• The farmer can use the land as security to obtain a loan. It solves/avoids ownership and demarcation dispute.

• The occupant can lease part or all his land and get extra income.

Land settlement and Resettlement: These are forms of land reforms involving the movement of people to new areas. Settlement and resettlement are methods under the transformation approach to agricultural development. They are often accompanied by major changes in land ownership and use, mechanization and large scale farming.

Land settlement refers to the first time establishment on land which was previously undeveloped.

Resettlement involves planned and controlled population transfer from one area to another. Often the transfer is from areas of high population density to areas of sparse population.

Objectives of the settlement schemes in Uganda: • To relieve population pressure and allow everyone to have enough land for cultivation e.g. the movement of people from Kabale to less crowded areas of Ankole and Bunyoro.

• To prevent reinfestation of tsetse flies into areas that had been cleared of them. The resettlement was to act as a barrier to prevent land from being covered by bush again e.g. in South Busoga.

• To facilitate mechanization. Large groups of farmers were set up to enable a nucleus of people unite in one economic activity so that they could pool resources i.e. land, tractors etc. for use economically.

• Ease provision of services e.g. education, electricity, water, etc to people in a group other than those scattered technical feasibility and economic returns from the development of substantial area of irrigated farm land. i.e. for experimental purpose e.g. Mubuku irrigation scheme in Kasese.

• To resettle the displaced. Some were set up to provide a temporary home to the refugees from politically instable areas e.g. the Agago refugee settlement in Northern Uganda, and Kiruandongo refugee camp in Masindi.

Factors to consider before establishing a settlement scheme: 1.

Planning should be done in advance and should take account of the following purpose and objectives of the scheme, which set out clearly social and cultural characteristics of the settlers etc.

2.

A feasibility study should be carried out to show the value added to the national economy the increase in revenue to the government etc.

3.

Selection of the settlers; the settlers should have genuine interests in participating in the scheme.

4.

And holding; these should be viable because at the time of establishment and also having potential for future development. '

5.

Land tenure; the ultimate land tenure arrangement in the programme must be specified. If doubts are allowed to pre-.settlers initiative will be crippled.

6.

Supporting services; agricultural extension services, fmancial credits, market facilities; training facilities etc. Should be available to the settlers.

7.

Efficient communication, goal roads, should be established. People in isolated areas away from the main population centres and the main stream of a country's economic and social life should be avoided.

Settlers should be allowed to live as a community and forge life among themselves and lead active and harmonious life.

REFERENCE 1.

Economics for Eastern Africa. By: I. Livingstone & H.W. Ord,

2.

Economics; Its principles and practices in developing Africa By A.E. Obone B.A., M.A, P.G.C.E.

3.

Benham's Economics; A General Introduction. By: F.N. Paish M.C., M.A (Cantab)

4.

Agricultural Economics and farm management, new edition; Macmillan publishers London. By: C.J.C. Akubuilo.

5.

Principles and practices of Agriculture Volume 2. Macmillan publishers Ltd. London. By: A.B. Bainempaka, Kato H. Mulera D.B and ObwolAmatto.

6.

East African Agriculture Macmillan publishers Ltd. London By: D.N. Ngugi et a11980.

7.

Farm management research bulletin: By: The Food and Agriculture Organization (F.A.O) 1997)