Role of Agriculture

in Economy
Chapter 3
Introduction
• Land is the first thing that comes to mind when one talks of
agriculture. In fact, it is not possible to think of agriculture without the
use of land.
• Not that the use of land in nonagricultural pursuits is less significant
but the nature of the industry of agriculture and its various processes
make the use of land central to agricultural pursuits

• Land in agriculture may, however, be used in a restricted sense though

its complex form affects agriculture in several ways. To be precise, our
discussion" will be pertinent to farm land.
Con…
• Land is also held to be the safest form of saving and insurance against
a future financial crisis. With the population rising fast, the demand for
land for various uses shall ever rise and increase its value
continuously.
• With demographic explosion on the one side and the poor employment
capacity of the non-farm sector, on the other - the demand for land is
bound to increase.
Role of Land in Agriculture
• Land is the basis of agriculture. Virtually all types of production
depend on land, in general, and all agricultural production depends on
it, in particular.
• Besides being the resource for crop, fodder, and forest production, it
also provides space for building cities, roads, airports, health resorts,
schools, industries and so on.
• So far as the role of land in agriculture is concerned, it serves as the
source of food and fiber production, pastures and grazing lands and
forests.
Food and Fiber Production
• Food production and the existence of mankind go together. Among the
three basic needs recognized for the existence of man.
• food, shelter and clothing, food is the most important of all. Land
serves as the key resource in food production.
• Cropping patterns have to be adjusted in order to ensure better returns
on the one side, and greater satisfaction, on the other.
Con…
• Ever growing requirements of food, fodder and fiber have led to the
intensive use of land. Land never felt exhausted nor shall it ever be to
meet the food and fiber requirements of mankind.
Con..
• Through technological development, of course, man has been able not
only to restore to the land its inherent powers but has contributed a
great way to improve these powers to raise higher levels of food
output from a given stock of land.
• The importance of land as a basic resource of food and fiber
production shall increase further as mankind's requirements will
increase in future.
Pastures and Grazing Lands
• Land is again a key resource for pastures and grazing lands which feed
a growing livestock and help improve the supply of food to man.
Since grazing lands do not fall under private ownership, the
productivity of such lands is low.
• Nevertheless these lands play a significant role in feeding millions of
cattle on the earth's planet. Most of these pastures and grazing lands
are found in mountains where rugged topography and severe climate
tell upon the productivity of land.
Role of Forests
• Land under forests serves man in several ways, in general, and
agriculture, in particular, Forest wealth plays a pivotal role in the
development of a region and to agricultural enterprises. Forests
contribute to the development of a region in three important ways:
Con..
1) As a source of timber, firewood, medicinal herbs and aroma
chemicals, minor forest produce and charcoal.
There can also be the source of energy in terms of wind velocity
and hydro dynamic pressure.
Forest areas can also be developed as scenic tourist resorts. Forests
are, in particular, important to agricultural development as these help
in maintaining the ecological balance, soil moisture and perennial
water supply.
Con…
2) Forests also offer scope for horticulture, plantation orchards, inter-
culture, floriculture and pasture development and as such help
directly and indirectly the development of agriculture in the region.
3) These also help in establishing agro-forestry-based industries and
handicrafts.
Con..
• A large number of agricultural enterprises can be undertaken on the
forest lands such as horticulture, plantation crops, orchards,
floriculture and pasture development.
• Forest lands provide a large variety of raw materials for setting up a
number of small industries.
• These may include pulp, paper and hardboards, rosin and turpentine,
sports goods, pencil industry, wicker work, match industry, drug and
pharmaceuticals, aroma-chemicals, furniture and a large variety of
other industrial enterprises.
Con..
• In a situation where farming refuses to absorb more workforce, what
can be more ideal than to use these forest lands and their enormous
potentialities to create alternative sources of employment?

• The role of land in agriculture may also be examined by considering

the functions of land as a factor of production in agriculture.
Land as a Factor of Production
• Land provides space for any productive enterprise to take place and
also acts as the repository of all the elements necessary for the growth
of plants and animals.
• Providing floor space both for farming and factory is the most
fundamental function that land performs.
• farming requires a larger floor space compared to industry, a major
chunk of land is devoted to agriculture even in the most industrialized
countries. This is so because of the very nature of agricultural industry.
Con…
• land serves as a repository of physical, chemical and biological
elements which are of utmost necessity for the“ growth of plant and
animal life.
• Unlike industry, agriculture greatly depends upon this function of
land as without these qualities, land will become barren and
unproductive.
• In fact, one of the definitions of agriculture is given as; "the
utilization of the natural fertility of the soil for the production of
commodities serviceable to man".
Peculiarities of Land
• Land as a factor of production has some important characteristics not
common to the other factors of production. These characteristics may
be listed as under:
1) Land is subject to the law of diminishing returns;
2) Land is limited in supply; and
3) Land is heterogeneous in quality.
Law of Diminishing Returns
• This law is one of the oldest laws in economics. Its application in land
is most pronounces.
• To a given piece of land, other things remaining the same, the
application of additional units of labour and capital yield positive but
diminishing returns for each additional unit of input.
• The law is founded on the vast and varied experience of farmers all
over the world. There is a limit beyond which output per farm does not
increase and this universal phenomenon is known to agriculture for
centuries now.
Con…
• Farmers always find it to their advantage to extend the area of
cultivation rather than increase intensity of cultivation on a limited
piece of land. By doing so, they succeed in reducing the incidence of
the law of diminishing returns.
Limited Supply of Land
• The second unique characteristic of land is that it is limited in supply
by nature. In view of the fact that land is preeminently subject to the
law of diminishing returns, the limitedness of its supply makes the
problem more serious.
• Compared to other factors of production which can be expanded by
man, land is not capable of expansion. This characteristic of land
makes it a precious factor of production in agriculture. Not only are
world's land resources limited by nature, a significantly larger land
area is of no use in agriculture.
Con..
• Malthusian thinking on population and food supply was greatly
influenced by the scarcity of land. He remained concerned with the
uncontrolled growth of population, on the one hand, and fixed supply
of land, on the other.
Heterogeneity of Land Quality
• The third important peculiarity of land as a factor of production in
agriculture refers to its heterogeneity in quality.
• Although to avoid incidence of diminishing returns, man has ever
sought to bring more land under the plough, he has always faced
problems on account of the poor quality of new lands.
Con..
• Naturally, the best lands come under the plough the first and lands of
poorer quality are sought thereafter. Not only does heterogeneity arise
as such, different types of soil qualities, ecological conditions,
topography and other factors also lead to wide varieties in the quality
of land.
Possibilities of Expanding Land Area
• The fact that land is limited in supply is universally recognized. What
then could be the possibilities of expanding land area for agricultural
and non-agricultural uses?
• Since the world population is rising at a fast rate, the pressure on the
existing land resources is mounting and adverse man-land ratios result
in declining marginal productivity of labour and other inputs. Under
such circumstances, poorer quality lands have to be brought under
cultivation.
Con…
• Perhaps the only possibility of expanding land area is by reclamation
from deserts, forests and river-ways. Such possibilities may have
appeared to be enormous in the beginning but eventually when the
process begins, it no longer looks like that.
• Some of the recent works done on American agriculture have shown
that modem technology has tended to harden the upper "rust of land
and the depth of hard crust is increasing.
• This further weakens the moisture retention power of the soil and
impoverishes the soil quality.
Con…
• It is also possible that some good quality lands may still be available
in the less populated areas of the world as Africa and Latin America.
• Lands may also be released for productive purposes from such
agencies as are not putting these to proper use.
• Some institutional changes may have to be brought about in this
regard.