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The essay is a discussion about the economic factors affecting the small scale farming activities. Several economic factors have been discussed to explain the concepts of production economics in the agricultural sector. Contemporary economic issues affecting the agricultural sector have been explained to indicate current affairs in the global economies. The economic aspects discussed in the essay are marketing, specialization, division of labor, globalization and the global economic crunch of the 2007-2009 which affected all the sectors of the economy.
Introduction The agricultural sector has been the mainstay of many economies in the world.
The developing countries have relied on agriculture to promote their economies. Small scale farmers have been able to improve their activities with the opening up of the international markets. However, the agricultural sector in many countries has been faced with many shortcomings which have led to the reduction of the quantity of output. There are many economic factors, both micro and macro, which have affected the agricultural activities in the global markets.
The globalization of the agricultural sector has created more opportunities to the small scale farmers.
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This has led to the improvement in quality and quantity of products produced by the sector. More markets have been opened up after globalization of many economies started. International trade has been of great benefit to small scale farmers in many countries (Daniels, Radebaugh & Sullivan, 2007). Markets Small scale farmers encounter marketing problems since they do not have adequate capital to strategically market their products.
The marketing of agricultural products has been affected by poor marketing systems in the international scene.
There is increase in competition in the global markets which has resulted from the entrance of many companies in the production of vegetables. Since small scale farmers have no capacity to compete in the global markets, this has resulted into reduction in the output. The opening up of domestic markets has negatively affected the small scale farmers. When the domestic market is opened to international trade, the prices of products reduce.
The farmers make fewer profits when the prices of their products are low. The opening up of domestic markets has several advantages in that the producers can access more information and knowledge which helps in the production of quality products. The opening up of the domestic markets creates more access to new technologies which assists small scale farmers in minimizing costs and maximizing their productivity. Globalization of marketing activities has helped many farmers exchange ideas with others from other countries.
Globalization has improved the exchange of technologies and knowledge between countries. As economies become open, more people with skills can move to other countries where there is high market potential for their labor. Poverty levels have reduced by great margins after the globalization of many economies. Most developed countries depend on agriculture. The improvement in the agricultural sector and the globalization of agricultural markets has enabled many people improve the production and marketing of their products (Daniels, Radebaugh & Sullivan, 2007).
Specialization Specialization in the agricultural sector has led to improvement in the productivity of many companies. This strategy has enabled small-scale farmers increase their productivity. A detailed study in the fields of specialization by the farmers encourages the farmers produce quality products which are competitive in the global markets. Many governments have been able to channel their funds to specific agricultural fields after the specialization in the industry.
The agricultural labor market has experienced specialization in the skills required to produce certain commodities. There are many skilled workers in the sector who can provide good services. Employment capacity of the agricultural sector has improved since the adoption of specialization in the labor market (Daniels, Radebaugh & Sullivan, 2007). Specialization has negatively affected the agricultural sector in that many people have lost many opportunities when one sector fails. When people specialize, shifting from one sector to another becomes a problem.
During the event of a crisis in one sector, the people who have specialized are adversely affected and they may become jobless. Countries which have specialized in the production of particular commodities face huge balance of payments when the sector they have specialized in fails. The agricultural industry has encountered a turbulent path towards the achievement of the current structures. This has caused the agricultural industry to lag behind other sectors of the economy. Countries which specialize in agriculture tend to have low economic productivity (Daniels, Radebaugh & Sullivan, 2007).
Economics of Small-Scale Farming: Globalization Impact. (2020, Jun 02). Retrieved from https://studymoose.com/production-economics-new-essay
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