Conventional Factors of Production

The basis of agricultural production and the most important production factor for the farmers is land. By means of it, they can use their labour (and capital) in order to earn their livelihood. In traditional agriculture, more land also means more, income and a better life, and increasing the size of the faun was a simpler way of improving the living conditions than farming the existing land more intensively. This was the source of the inclination to buy land that is still found in agrarian societies.

The possibilities of increasing the area of land are, however, limited. Land cannot be enlarged or increased beyond that which it is, and when all of the land bas been put under cultivation, growing populations lead to continually smaller farms. This is why land has the reputation of being a scarce production factor.

However, "scarce" and "abundant" are relative. Since mankind first began settling, land has changed in its role as production factor.While at the beginning only the natural fertility of the previously untilled soil was present, it was then put under cultivation. The soil has improved over the centuries through the work of man so that more products can be grown on the same amount of land, or ruthless exploitation and negligence have mined it. In many regions, the productivity of the soil has been greatly irproved by artificial irrigation systems, or the crop intensity was increased. These measures reduce the scarcity in the sense that on a given piece of land as much can be grown as previously only on a larger area of land. That this process has not remained without success even in densely populated areas can be seen from the frequently deficient utilization of the soil that can, in some cases, be called wastefulness. The prevailing land and land use laws may play a role in this contextl, as well as the limited technical possibilities in traditional agriculture. This does net change anything in the fact that land in the scope of traditional agriculture is indeed limited, but that this can be overcome to quite an extent. In other words, if the system of land management is improved, the scarcity of land is reduced by more intensive cultivation. An improvement in the agrarian structure creates the precondition for appropriate management and land use systems, a purposeful integration of animal husbandry and rwch more.

The farmer's major instrument for achieving a good output is labour. Labour has a direct effect if by means of investing a greater amount of it the output is increased. Indirectly, labour can have an effect on the production via capital formation.

In densely populated agrarian societies, labour is an abundant production factor, especially in relation to land and capital. This results, in extreme cases, in land being substituted for by labour. In the case of a scarcity of land, e.g., fodder is not grown as the entire land is needed for growing crops to feed the people. The necessary fodder for the animals is collected by foraging weeds which demands the investment of a great deal of labour. A further consequence of the often unproportionally large supply of labour is rural underemployment. Manpower that is actually not necessary in the agricultural production process is nevertheless retained in the family members. By remaining together, the family supplies a basis for all of the members to exist upon, even if at a lower level. It must be mentioned, though, that that which is produced is consumed, and there is little left for investments,

While quantitatively abundant labour is available, narrower limits exist qualitatively. This has an effect when traditional agriculture is no longer practiced. One peculiarity of an occupation in agriculture is its many sidedness. In his function as a labourer, the farmer cares for his crops and animals in order to achieve a larger output. In his function as farm manager, he chooses between alternative crops and methods, whereby the people in his surroundings influence the type and possibilities of the choice. The family along with the existing norms, traditions, and religion plays a particularly important role.

With their ability to work, learn, think, and strive for something, the farmers have continued to develop the cultivation of the soil from the digging stick culture of earliest times up to modern agriculture. The rapid introduction of innovations today, however, often takes them to their limits because the existing abilities are not adequate to comprehend the consequences of the changes and to plan and carry out the measures purposefully.

Under these circumstances, the productivity of the labour would be raised if the agrarian structure could develop a more balanced ratio between labour and land.The precondition for this could be to raise the abilities of those cultivating the soil to a higher level.

According to the general opinion, traditional agriculture utilizes little capital. This is true if one thinks of modern form of capital. However, if one looks at it more closely one finds that traditional forms of capital are indeed abundant so that a greater use would only lead to a slight increase in productivity. Soil amelioration, buildings, leveling fields, and other forms of capital that are created by the work of the farmer's family are examples. In the single cases they are only small increments in capital stock; however, they add up to significant quantities over the generations and on the many farms.

The need for capital created by work is large and the chances of capital formation are correspondingly great if the level of thei individual farms is abandoned. However, this leads to unsolved organizational and allocation problems. At the village or regional level, the yield resulting from the invested labour no longer flows automatically to the labourer's own family.

The capital stock is even smaller when new forms of capital are considered, e. g., implements that have to be procured through the market. Adequate agrarian structure forms cannot only reduce the organizational problems involved in non-monetary capital formation but also create paths for the introduction of new forms of capital that could make a larger contribution to production.