Module

Basic Principles in Agricultural Economics

 

    Module content

  1. Introduction to Agricultural Economics
  2. Macroeconomics
  3. Introduction to Farm Management
  4. Theory of Agricultural Production
  5. Marketing Agricultural Commodities
  6. The Theory of Investment

 

 

Chapter 1: Introduction to Agricultural Economics

 Number of hours:  6

bullet Definitions of economics and agricultural economics;
bullet History of food production; Specific characteristics of agriculture as economic activity;
bullet Position of  agriculture in economy and society (chapter that refers to each country specific characteristics to be developed by each member of working team);
bullet Different approaches toward the role of agriculture in economic development;
bullet Farm as income providing firm;
bullet Natural and economic environment of farm firm;

 

Suggested reading:  

  1. Gail L. Cramer, Clarence W. Jensen, Douglas D. Southgate, Jr.: Agricultural Economics and Agribusiness, John Wiley & Sons, Inc.1997.
  2. H. Evan Drummond, John W. Goodwin: Agricultural Economics, Prentice Hall
  3. Dr. Frank-Michael Litzka University of Hohenheim, Institute for Agricultural Economics, Dept. for Farm Management "Fundamentals of Agricultural Economics"
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Chapter 2: Macroeconomics

 Number of hours: 10
bullet Gross domestic product; national income;
bullet The price level and GDP;
bullet Tools of macroeconomics –aggregate demand-aggregate supply; shifts in aggregate demand; shifts in aggregate supply;
bullet Full employment; simultaneous inflation and unemployment;
bullet Macroeconomic linkages to agriculture (monetary policy, fiscal policy):
bullet Elements of agricultural policy;
bullet Basics on Common Agricultural Policy (CAP)

 

Suggested reading:

  1. Paul A. Samuelson and  William D. Nordhaus: Ekonomija, 15. ed., “MATE” d.o.o. Zagreb,1996.
  2. John Sloman: Economics,3rd ed., Prentice Hall,1997.
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Chapter 3: Introduction to Farm Management

Number of hours: 8
bullet Management: science, theory and practice (definition of management, its nature and purpose);
bullet Basic management functions (planning, organization human resources, leadership and controlling);
bullet Control techniques and information technologies (control techniques: budgeting; mathematics programming, computer use in information dissemination);
bullet Organization and economic assumptions and productions factors on a family farms and agricultural firms;
bullet Production resources economics;
bullet Labor economics

 

Suggested reading:

  1. Ronald D.Key, William M. Edwards (1994): Farm management , Mc Grow-Hill
  2. Heinz Weihrich, Harold Koontz (1994.): Menedzment, Zagreb, Mate, 1994.
  3. Castle, N. Emery, Becker, M. H., Nelson, A. G., (1987):"Farm Business Management - The Decision-Making Process", Third Edition, Macmillan Publishing Company, New York, USA
  4. Dillon, I., John, B. J. Hardaker (1980):"Farm Management Research for Small Farmer Development", FAO Agricultural Services Bulletin No 41, UN FAO, Rome
  5. Barry P.J., Ellinger P.N., Hopkin J.A., Baker C.B.: Financial Management in Agriculture, Interstate Publishers, Inc., Danville, Illinois, SAD
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Chapter 4: Theory of Agricultural Production

 Number of hours: 16

bullet Factors of agricultural production;
bullet Basic economic decisions (what, how, how much, when, for whom to produce);
bullet Basic terms and definitions (depreciation, costs, marginality;  revenues, profit);
bullet Production function ; production function analysis with one factor; multi-factorial cases; 
bullet The cost function;
bullet Cost calculation (fixed, variable, opportunity, marginal costs); gross margin calculation;
bullet Factor-factor relationship; marginal rate of substitution; minimum cost combination;
bullet Product-product relationships (competitive, parallel, joint);
bullet Optimum combination of a farm firm (optimum special intensity, optimum factor combination, optimum product combination).

 

Suggested reading:

  1. Paul A. Samuelson and  William D. Nordhaus: Ekonomija, 15. ed., “MATE” d.o.o. Zagreb,1996.
  2. John Sloman: Economics,3rd ed., Prentice Hall,1997.
  3. Gail L. Cramer, Clarence W. Jensen, Douglas D. Southgate, Jr.: Agricultural Economics and Agribusiness, John Wiley & Sons, Inc.1997.;
  4. Dr. Frank-Michael Litzka University of Hohenheim, Institute for Agricultural Economics, Dept. for Farm Management and "Theory of Agricultural Production"
  5.  Mansfield: Microeconomics, Nothon &company, 1994
  6. Jozo Bakalar: Mikroekonomija,Sveuciliste u Mostaru –HKD Napredak Sarajevo, 1997.
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Chapter 5: Marketing Agricultural Commodities

 Number of hours: 12 
bullet Markets; basic definitions
bullet Demand; the relationship between demand and price; the demand curve; other determinants of demand; demand equations;
bullet Supply; supply and price; the supply curve; other determinants of supply;
bullet Price and output determination;
bullet Changes in supply and demand;
bullet The theory of consumer behavior;
bullet Utility analysis;
bullet Concept of elasticity; price elasticity of demand; price discrimination; cross-price elasticity of demand; income elasticity of demand; price elasticity of supply;
bullet Marketing margins (derived demand, derived supply);
bullet Government intervention in the market; reasons to intervene;
bullet  Food market regulations.

 

Suggested reading:

  1. H. Evan Drummond, John W. Goodwin: Agricultural Economics, Prentice Hall;
  2. John Sloman: Economics,3rd ed., Prentice Hall,1997.
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Chapter 6: The Theory of Investment                

 

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Number of hours: 6
bullet Basic definitions and assumptions of theory of investment;
bullet Concepts underlying investments: time value of money, future value, present value;
bullet Economic profitability of investment;
bullet Methods in investment analysis: payback period, simple rate of return; net present value; internal rate of return;
bullet Financial feasibility of investment;
bullet Mutually exclusive investments
bullet Sensitivity analysis; break-even analysis; scenario analysis;

 

Suggested Reading:

  1. Ronald D.Key, William M. Edwards (1994): Farm management , Mc Grow-Hill
  2. H. Evan Drummond, John W. Goodwin: Agricultural Economics, Prentice Hall;
  3. Silvije Orsag: Procjena investicijskih projekata, Masmedia, Zagreb, 2002.
  4. J.Price Gittinger: Economic Analysis of Agricultural Projects; The Johns Hopkins University Press Baltimore and London;
  5. Dr. Frank-Michael Litzka University of Hohenheim, Institute for Agricultural Economics, Dept. for Farm Management "The Theory of Investment".
  6. FAO Investment Centre: Financial analysis in agricultural project preparation.

 

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