INTRODUCTION TO

AGRICULTURE
ECONOMICS
Factors of Production
 FACTORS OF
PRODUCTION
• People cannot satisfy all of their wants and
needs because productive resources are
scarce. The factors of production, or
resources required to produce the things we
would like to have are land, capital, labor,
and entrepreneurs.
FACTORS OF PRODUCTION
Resources used for production
There are four types:
• Land
• Labor
• Capital
• Entreprenuership
 The success of a farm, is dependent on the
entrepreneur’s ability to efficiently combine the
other three factors (land, labor, capital)
 LAND
• Natural resources(water, sun, trees, air, sea, minerals
in the soil, etc.)
• Characteristics:
• A gift of nature
• Limited in supply
• Land is immovable
• The supply of land involves no opportunity cost
 LAND
• In the Caribbean, most farmers do not own the land;
they rent(sharecropping).
• Land may increase in value for various reasons:
- May contain mineral deposits (quartz, sand and gravel)
- May contain a natural water source (stream, spring, river)
- May contain valuable trees or infrastructure
• Land can also decrease in value, depending on:
- Land classification
- Location
- Previous use
 CAPITAL
 Refers to the man-made resources used for
production
 Examples: buildings, machinery, raw materials,
tools, materials (fuel, feed), livestock & liquid
capital (cash)
 Characteristics:
• Man made
• Raises the productivity of other factors
• Has a productive lifespan and cash value
 CAPITAL
• Source of liquid capital: commercial banks, co-
operatives, credit unions, agricultural banks
• Types of Capital
• Fixed capital: assets that are not depleted or used up in
the production of a product. E.g. buildings and
machinery.
• Working capital: assets that are depleted or used up in
producing goods/services. E.g. cash, fuel, feed.
 LAND OR
CAPITAL?
• Ice at Mount Everest
• Ice in a skating rink
• Sea water
• Sea water in a seafood restaurant
• Sharks in the Atlantic Ocean
• Sharks at the Belize Zoo
 LABOR
• Workers (the human capital)
• Also refers to the total sum of money and the total
number of man-hours required to produce
goods/service
• In Caribbean, labor is a challenging factor of
production. Due to slavery and indentureship,
descendants have a negative attitude toward
agriculture and pursue other careers.
 LABOUR
Types of labor
• Family labor: small farmer and his family does all the
work

• Operator labor: medium to large scale farmers use hired

labor on a permanent basis and casual labor (temporary)
for specific operations like planting, harvesting, fertilizer
application or pest and disease control.
 LABOR
• Task labor: for specified hours of work or operation. Eg
milking cow, land clearing

• Contractual labor: construction of livestock pens etc.

 MANAGEMENT/
ENTREPRENEURSHIP
 Effective use of resources by the farmer. (land,
labor, capital and time).
 Farmers need to achieve maximum production at
minimum cost.
 On small and medium scale farms, most farmers
act as their own farm manger. They undertake
tasks such as planning, organizing, directing
workers, and supervising farm operation.
 MANAGEMENT/
ENTREPRENEURSHIP
• On large farms, farm managers are employed to
run the day-to-day operations of the farm.
• Management involves situational analysis,
decision-making, and acceptance of responsibility
(good or bad).
• Manager must have technical and scientific
knowledge of farming and combine it with
business skills to make the farm profitable.
 CLASS ACTIVITY
• In pairs, choose a specific agricultural product and
list the factors of production. Explain in detail.
Example: Honey Production
1. Land: need small area of land for the apiary,
trees and flowers, water
2. Capital:
• Fixed Capital: hives, smokers, bee stand, cover all,
gloves, strainers, hive tool, frames, veil, extractor,
wheel barrow, vehicle.
 CLASS ACTIVITY
• Working Capital: wax, bottles, labels, cash, gasoline,
lighter, wood shavings
3. Labor:
• Family labor: Me and my daughter.
• Work: maintain bees and hive, extract honey, filter the
honey, bottle honey.
4. Management: Tamara - planning, decision-
making, upgrade knowledge about bees, set dates for
various operations such as feeding, inspection, bottling
and marketing. Take full responsibility (Good or bad).