Theory question 109
Basic Agricultural Economics(a) Discuss the effects of rural-urban migration on agricultural production
(b) Explain how: (i) demand affects agricultural production given that supply is constant; (ii) supply affects agricultural production when demand is constant
(c) State two effects of (i) demand on farmers' income when price is constant. (ii) supply on farmers' income when demand is constant.
(d) State five roles expected of a farm manager in a farm enterprise
Show the model answer
(a) Shortage and high cost of farm labour; ageing farming population; less food produced/food shortage and higher prices; abandoned farms; slower adoption of innovations; but remittances may fund farms, and fewer people share land
(b)(i) When demand rises with supply fixed, prices rise, encouraging farmers to produce more; when demand falls, prices fall and production is discouraged
(ii) When supply rises with demand fixed, prices fall, which may discourage production; when supply falls, prices rise
(c)(i) At constant price, higher demand means more is sold so income rises; lower demand means less sold and income falls
(ii) With constant demand, an increase in supply lowers prices and can reduce farmers' income (glut); a fall in supply raises prices and may raise income
(d) Any five: planning; organising resources; decision making; coordinating and supervising workers; record keeping; marketing produce and buying inputs; controlling and evaluating; risk bearing
Use the laws of demand and supply in (b) and (c).