SS 2 Third Term Agricultural Science Lesson Note – Implications of Demand and Supply for Agricultural Production

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SUBJECT: AGRICULTURAL SCIENCE

CLASS: SS 2

TOPIC:  IMPLICATIONS OF DEMAND AND SUPPLY FOR AGRICULTURAL PRODUCTION

CONTENT:

• IMPLICATION OF DEMAND AND SUPPLY FOR AGRIC PRODUCTION
• PRICE SUPPORT, PRICE CONTROL AND SUBSIDY PROGRAMME

SUB TOPIC 1: IMPLICATION OF DEMAND AND SUPPLY FOR AGRIC PRODUCTION

The implications of demand and supply for agricultural production include the following

1. When the demand for a farm produce exceeds supply, price tends to rise
2. When the demand for a farm produce is lower than the supply, the price falls
3. Increase in the income of the consumer will make them demand for more farm produce vice versa
4. Increase in the price of produce may lead to low demand for it and shift to the close substitute that has a lower price
5. High cost of production may lead to low output, low supply and high prices of produce and vice versa
6. Supply of farm produce will be low when environmental factors for production are unfavorable and vice versa
7. High cost of farm inputs may lead to low supply and high cost of farm produce and vice versa
8. If the taste of consumers is in favor of a product, the demand and price of such produce will increase and vice versa.
9. Increase in the number of producers will lead to increase in supply and reduction of price and vice versa.

PRICE SUPPORT AND ITS EFFECTS ON AGRICULTURE

Price support is the government-imposed price floors on selected farm produce. It is also known as ‘minimum prices’ established by the government above equilibrium price. The government supports in the following ways:

1. Support for farm prices income and output
2. Support for soil and water conservation
3. Support for agric research
4. Support in the form of farm credit
5. Support in the form of insurance (crop and animals)
6. Subsidized sale of farm produce

EFFECTS

1. They increase farmers’ income
2. They increase food prices to consumers
3. They cause an over allocation of resources to agriculture
4. The pollution increases because of the greater use of agrochemicals
5. The society pays higher taxes to finance the purchase and storage of surplus output
6. They cause surplus production

PRICE CONTROL AND EFFECTS ON AGRICULTURE

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