Agricultural Economics

Agricultural Economics and the role of the Agricultural Economist
The world of agricultural economics is a dynamic and vibrant world that has both broadened and
deepened in recent years. The field originated in the early 20th century with a focus on farm
management and commodity markets but has since moved far into the analysis of issues on food,
resources, international trade, and linkages between agriculture and the rest of the economy.
In the process, agricultural economists have been pioneering users of developments in economic theory
and econometrics. In the process of intense focus on problems of economic science that are central to
agriculture, agricultural economists have developed methods of empirical investigation that have been
taken up in other fields.
The application of economics to agriculture in a complex market company such as that of South Africa
has a long and rich history. We can summarise the activities of agricultural economists at micro- and
macroeconomic level.
Agricultural economists at the micro level are concerned with issues related to resource use in the
production, processing, distribution, and consumption of products originating in agriculture.
Production economists examine resource demand by businesses and their supply response
Market economists focus on the flow of food and fibre through market channels to its final destination
and the determination of prices at each stage
Financial economists are concerned with issues related to the financing of businesses and the supply of
capital to these firms
Resource economists focus on the use and preservation of the nation's natural resources
Other economists are interested in the formation of government programmes for specific commodities
that will support the incomes of farmers and provide food and fibre products to low-income consumers
Agricultural economists involved at the macro level are interested in how agriculture and agribusinesses
affect domestic and world economies, and how the events taking place in other sectors affect these
firms, and vice versa.
Agricultural economists employed by the Central Banks must evaluate how changes in monetary policy
affect the price of food
Macroeconomists with a research interest may use computer-based models to analyse the direct and
indirect effects that specific monetary or fiscal policy proposals would have on the food and agricultural
industry
Those employed by multinational food companies examine, and conduct or facilitate, global trade
relationships for food and fibre products Others address issues in the area of international development
Economists are frequently concerned with what happens at the margin. A microeconomist may focus on
how the addition of another input by a business, or the purchase of another product by a consumer, will
change the economic well-being of the business and the consumer.
A macroeconomist, on the other hand, may focus on how a change in the tax rate on personal income
may change the nation's output, interest rates, inflation, and the federal budget deficit.
The key work in this example is change, or more specifically how a change in price, quantity, etc. will
affect other prices and quantities in the economy, and how this might change the economic well-being
of consumers, businesses, and the economy as a whole.
Microeconomics has a role in society as well as in the economy of a region. This field of study allows
economists to determine not only the patterns of consumers, businesses, and other organizations that
are spending money but also the factors that are affecting spending habits and production decisions.
Microeconomics involves studying the concepts and ideas that establish supply and demand in a
particular market and the way that consumers and businesses alike prioritize their spending.
Essentially, the role of microeconomics is to determine how, when combined, small economic
components are affecting the broader economy. Instead of looking at market indicators that represent a
wide field of data, however, this type of study considers how individuals, households, or specific markets
are responding to markets. Although this economic approach does not necessarily reveal or determine
economic conditions, the process offers insight into the way that consumers and businesses alike decide
the value of a particular product or service. This is expressed in the amount of resources that either the
consumer or business dedicates to an item.
Rather than tallying the way that consumers as a whole are responding to a particular product, for
instance, microeconomics begins with the study of the extent of demand stemming from one single
consumer. Once this demand has been determined, this study continues and expands to include a
greater number of individuals in the assessment. Economists also study businesses to learn how these
entities respond to different types of consumer demand and the ultimate effect on pricing.
A major role of microeconomics is to recognize the way that prices for goods and services are
established in a given market. The process involves identifying the impact that supply and demand have
on the way that items are produced. When there is a disconnect between the amount of supply and the
interest stemming from buyers, there is an inefficiency in the market. The application of
microeconomics should ultimately reveal where and how the market imbalance occurred.
Also, the role of microeconomics reveals the way that buyers prioritize resources. This is because even
when consumers possess an interest in buying particular service or product, these individuals are
typically limited in the amount of resources available to them. Subsequently, the strategies involved
with microeconomics could reveal the way that consumers prioritize resources and also offer insight on
the way that individual buying decisions affect market competition.

Agricultural Economics

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Agricultural Economics and the role of the Agricultural Economist

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