Environmental Impact Assessment (EIA)

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LECTURE 1

• INTRODUCTION

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Definition

• Agricultural Economics
• Is the discipline that adapts the principles of
  economics to
• Farming activities
• Farm Input manufacturing and distribution.
• Food processing.
• Wholesaling and retailing.
• Integration of these activities gives rise to a
  set of products and services that are passed on
  until they reach the consumer.

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Definition

• It helps people to decide what kind of food and
  how much of each should be produced in order to
  supply the needs of a country.
• It also aids decisions about which crops are most
  profitable for the farmer to grow.

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Definition

• Resources available restrict the ability of the
  producer to supply demand, especially the
  availability of land, labour and capital.
• The farmer has to decide on the best use of each
  resource to bring the highest return.
• Agricultural production economics is primarily
  concerned with economic theory as it relates to
  the producer of agricultural commodities.

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Definition

• Agricultural Management
• Is the application of management principles to
  agricultural production.
• Combines the inputs of labour, capital, services
  and natural resources to yield farm products.
• Organises the production, distribution,
  consumption and investment of the farm products
  and resources.

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Agricultural Economics Concerns

• Major concerns include
• Farming goals and objectives
• Choice of output to be produced
• Allocation of resources among outputs
• Assumption of risk and uncertainty

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Farming Goals and Objectives

• Assumption is that
• The objective of any farm manager is that of
  maximizing profits
• Reality
• Individual farmers have unique goals.
• One farmer might be more interested in obtaining
  ownership of the largest farm in the area.
• Another might have as his/her goal that of owning
  the best set of farm machinery.
• Still another might be interested in minimizing
  his/her debt load.

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Farming Goals and Objectives

• The goals and objectives of a farm manager are
  closely intertwined with a persons psychological
  makeup, and the goals selected by a particular
  person may have very little to do with profit
  maximization.

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Choice of output to be produced

• Farm manager faces an array of options with
  regard to what to produce given available land,
  labour, machinery and equipment.
• Choices to be made include
• What to produce
• How much to produce
• How to allocate available resource to competing
  uses
• Other constraints
• Government may restrict number of acres of a
  commodity a farmer may grow.
• Farmers knowledge of certain commodities may be
  limited
• Limited labour and machinery and other inputs

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Resource Allocation

• Farmer needs to decide how available resources
  are to be allocated among outputs.
• Questions to answer include
• which field is to be used for the production of
  each crop
• What amount of farm labor, machinery and time
  must be allocated to each crop and livestock
  activity, consistent with the farmers overall
  objective.

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Risk and uncertainty Assumption

• Economic production models assume that the farm
  manager knows with certainty the
• Applicable production function
• Prices of inputs to be purchased and outputs to
  be sold.
• This assumption is almost never met.
• Weather is a key challenge but nature presents
  other challenges such as
• Cattle developing diseases and dying
• Insects and diseases destroying crops.

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Risk and uncertainty Assumption

• Farmers may know the prices of they must pay for
  fuel, fertilizer and seed at the time they
  purchase these inputs.
• However they are almost never aware at the
  beginning of the production season the prices
  that will prevail when outputs are sold.

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Agricultural Economic Principles

• Help producers produce the goods that the
  consumer wants to buy, in quantities that fit the
  demand and at the time the goods are required.
• Help producers allocate restricted resources
  among competing uses
• Help producers decide on the best use of each
  resource to bring the highest return.

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Agricultural Economic Principles

• Help producers answer the basic questions in
  organizing the production such as
• Which inputs to use
• What quantity of different inputs to use
• Which technology to use e.g. in controlling downy
  mildew what combination of resources and
  technology will minimize crop losses for the
  least possible cost? You could
• Choose a resistant variety or cultivars
• Control environment to minimize incidence and
  spread e.g. Use of greenhouses
• Utilize a fungicide spray program

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Agricultural Economic Principles

• Since resources are limited in every economy,
  when more of them are used to produce certain
  goods and services, fewer resources are left to
  produce other goods and services.
• Help producers choose the technique (technology)
  that results in the least cost possible (in terms
  of resources used) to produce each unit of a good
  or service that the society wants.

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Agricultural Economic Principles

• Help producers organize the production process
  through the price mechanism.
• The price of an input normally represents its
  relative scarcity.
• If the price of an input increases in relation to
  the price of other inputs used in the production
  process of a commodity, producers will switch to
  a technique that uses less of the more expensive
  input in order to minimize their cost of
  production.

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Agricultural Economic Principles

• Dictate that the best technique to use in the
  production process is the one that results in the
  least cost of production.
• If fuel prices increase, then minimum tillage
  could be used
• If greenhouse labor prices increase, then the
  farmer could decide to use automated watering
  technology
• The opposite occurs when the relative price of an
  input decreases

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Agricultural Economic Principles

• The problem of distributing resources,
  commodities and proceeds from the production
  process is also answered the price mechanism.
• Resources are distributed to producers who have
  the money to pay for them while commodities are
  distributed to consumers who have the money to
  pay for them.
• Proceeds are paid to producers for commodities
  efficiently provided while proceeds are paid to
  consumers for resources provided.

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Agricultural Economic Principles

• In distribution there is government intervention
  in order to provide for equitable distribution
  of resources commodities and proceeds.
• The government taxes wealthy individuals and
  business enterprises and redistributes to the
  poor in form of subsidies or in order to provide
  certain public goods such as public education,
  national defense, law and order, agricultural
  extension as well as agricultural commodity
  programs.

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Importance Of Agriculture

• Provision of food for the ever-increasing
  population.
• Provision of jobs in the agricultural industry as
  for farmers, crop processors, traders, middlemen
  and transporters.
• Government revenue through taxes.
• Agricultural products are a major source of
  domestic and international trade.
• Foreign Exchange earnings through export.
• Used to pay for essential import goods

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Importance Of Agriculture

• Provision of market for other industries
• Serves as a large consumer market for industrial
  products such as plastic shoes and boots,
  buckets, fertilisers, pesticides, agricultural
  tools and machinery, building and construction
  materials, bicycles, trucks, lorries, tractors,
  boats and many others.

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Importance Of Agriculture

• Provision of raw materials for the Industries.
• The ratio of agricultural raw materials to
  non-agricultural raw materials used in industries
  is 41.
• Education and Training
• Many agricultural education institutions are
  established to educate and train people in the
  science of agriculture. This provides people
  with a career