1.1.2.2 Preconditions for Modern Agriculture
The conventional production factors land, labour, and capital
are able to provide the farmers with a subsistence, especially
if the population is not dense. However, if a noticeable and
rapid increase in production is desired, they do not suffice.
To do so, further factors are necessary, and these are those
production factors that are actually scarce. They cannot be
provided by the farmers themselves, but rather must be produced
by the society in processes involving a division of labour.
Agricultural development is not only dependent upon land,
labour, and capital, but rather an interplay between these
traditional factors of production and the new factors produced
in other sectors of the economy. If agricultural production
is to develop beyond the stage of self-sufficiency, an external
demand as well as new technologies and inputs that are produced
outside the agricultural sector are necessary.
A strong effective demand for agricultural products gives
the farmer an incentive to increase his production beyond
the level of subsistence. The achievable prices have to be
high enough to cover the costs of production and be a satisfactory
reward for the involved efforts. Especially the latter is
dependent, among other things, upon the existence of functioning
markets.
In early stages of development, an effective demand for agricultural
products -not the desire for more food- is often limited because
the number of buyers (due to the widespread self- sufficiency
in rural societies) is small and because of the limited purchasing
power of the purchasers. Furthermore, the demand in most regions
is limited to cereals. Perishable goods can, on account of
the underdeveloped transport and storage systems, only be
produced in the close vicinity of cities. In case no opportunities
exist for exporting the produce, the size of the domestic
demand sets the limits of the development in agricultural
production.
Before the domestic demand can be stepped up, the non agricultural
sectors have to be developed in order for the necessary purchasing
power to be there. This development in industry, trade, and
crafts is, on the other hand, the precondition for an increase
in agricultural production because inputs are necessary that
are produced outside the agricultural sector such as commercial
fertilizer, implements, and services. To quite an extent the
modernization of agriculture is concerned with supplying energy.
Fossil fuels play a particularly important role in production
increases.
Modernizing agriculture always means an increased interlacing
of agriculture with the other sectors of the economy. In order
to achieve lasting increases in agricultural production it
is necessary to leave the level of an economy based on self
sufficiency and enter a stage of agricultural production interlaced
with the market. In this process, the market prices are the
incentive and orientation for the farmers; these, however,
simultaneously raise the involved risk. Although farmers always
had to face production risks, which could be mitigated if
needed by tightening one's belt, the modern producer of agricultural
products is additionally faced by a marketing risk and technical
risks owing to the new procedures that are ill adjusted. The
risk is also much larger since the externally purchased inputs
have to be paid. Functioning markets are a precondition to
make the risk bearable. The agricultural comrodities markets
will have to be expanded and made more dynamic in order to
fulfil the conditions of a demand backed by strong purchasing
power that is needed to develop modern agricultural production.
A higher level of agricultural production, stimulated by
the increasing demand, is the result of new technologies in
agriculture, in other words, new methods of "how to do
it". Techniques, methods, and varieties have to change
continually in modern agriculture if stagnation is to be avoided.
Such innovations can be copied from other farms and other
regions. First and forertust, they are the result of research
and experiments. The development of fertilisers and pesticides,
new high yielding varieties, technics, implements, and irrigation
methods are examples of new technologies in agriculture. Since
in agriculture production there is a close interrelation between
various factors and practices, changes should be made together
if possible. The simultaneous introduction of a package of
innovations has a greater effect. On the other hand, sometimes
only one factor has a limiting effect and changing it can
raise the productivity of the entire system. Frequently it
is the question of new inputs that have to be purchased, and
since these are often nondurable goods it is necessary to
continually buy them. Usually it is necessary to simultaneously
employ a whole package of new inputs. Therefore, many goods
have to be purchased so that it results in a strong interlacement
with the rest of the economy. Modern agriculture is no longer
simply the result of the farmer's struggle with his land,
but rather it is also influenced by the activities of factory
workers, scientists, and merchants who make their contribution
to agricultural production indirectly through the division
of labour. Modern agricultural production is part of a closely
knitted all inclusive economic system.
For new inputs to be successful, it is important that they
are available everywhere; in other words, that there are functioning
supply markets. They also have an effect on the conventional
production factors. If the innovations are lumped together,
they often bring about a change in the entire production process
and cropping system, e. g., as a result of economic and organizational
considerations or conditions of crop rotation. The agrarian
structure has to give the incentive for the development of
such new technologies and for acceptance of innovations. The
creation of an institutional framework that facilitates the
interlacement of the agricultural sector with the rest of
the economy is an important aspect.
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