Theory question 109
Basic Agricultural EconomicsExplain the following terms used in agricultural production:
(a) hired labour
(b) fixed capital
(c) working capital
(d) management
Show the model answer
Model answer
(a) Hired labour: workers employed and paid wages (daily, weekly or monthly) to do farm work, as opposed to family labour
(b) Fixed capital: durable assets used over many production seasons, e.g. land improvements, buildings, machinery, tree crops, breeding stock
(c) Working (circulating) capital: inputs used up within one production cycle, e.g. seeds, fertilizer, feed, chemicals, cash for wages
(d) Management: the organising and controlling of land, labour and capital, taking decisions and bearing risks to make profit (the entrepreneur)
Explanation
One clear definition with an example for each.