Economic Factors Affecting Farming
Agriculture is one of the economic areas that have helped improve the lives of many people in the globe. In each and every nation, there is always a certain population that relies on farming as an exceptional way of making income and earning a living. Farmers have to make distinctive decisions each day in order to excel in this field. For instance, they have to know what to grow, what animals to rear, the level and the type of inputs and effective method to embrace. Unluckily, there are certain economic, social and environmental factors that determine their next steps.
Although farming is one of the oldest professions with a deep-seated history, modern farming is not that easy. There are notable modern economic factors affecting farming. Today’s farmers have to overcome competition in complex economic environment where targeted clients can still get or choose produce grown globally. Some governments are enthusiastic to offer financial incentives for the production of certain crops rather than others.
It is not an easy field and with the many challenges ahead, farmers have to think broadly and outsmart any competitors. They can still create and manage their own market via direct sales and other marketing strategies or plans. But on the other hand, they are still at the mercy of economic factors that affect agriculture sector. These distinctive factors include;
- Commodity prices in the market- The prices of some of the crops produced by farmers depend on variety of factors. These include investor speculation, demand of these crops and weather. Farmers who grow commodity crops either lose or earn certain profits based on the current rate that industrial buyers will offer. Weakness of dollar also affects farmers as they have to compete with farmers in America and other parts of the world.
- Labor- Farmers rely on extensive labor from unskilled and cheap workers in order to meet their goals instead of going for machines. These farmers have to compete with farmers from other areas where labor is expensive and rely on machines. Hence, their produce and sales will vary depending on how efficiently they can produce them for the market.
- Finance [capital] – This is the money a farmer needs to invest in the farm and can also be used to increase amount of inputs into the farmhouse. This capital can be used for machinery instead of cheap labor, buy seeds, fertilizers or renewing farm structures. If a farmer is able to invest capital appropriately, farm yields will increase and this means more profits which can be vital for more investment.
- Government subsides- The modern federal agricultural policy relies on the assumption that agricultural mass production benefits the economy by keeping food prices as low as possible. This policy offers crop growers with a measure of economic stability making it easy for farmers to get other products in the market made from other crop commodities. Hence, this policy spurs farmers to increase productivity and make profits regardless of the market conditions.
- Technology- machines and advanced irrigation are great types of technology that easily increase farm yields. Greenhouses with computer-controlled technology provide a great environment for growing certain high on demand crops. Genetic engineering has made it easy to grow new crop brands.
The above-mentioned economic factors have influenced the agriculture sector in one way or another. Food production has increased with time and farmers have been able to improve their living standards. More so, governments are able to earn revenues and improve their operations.
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