Factors of production in agriculture

Factors of production in agriculture

A farmer needs land, workers, tools and someone to organise the work. These help the farmer produce crops and rear animals.

Factors of production are the resources used in the production of goods and services.

Simply put, they are what farmers use to produce things like rice, eggs and milk. • Land • Labour • Capital • Entrepreneur

Land

Land includes the soil where crops grow and other natural resources used for farming. Examples are farmland in Benue and water from a river used for irrigation.

Land refers to all natural resources used in production.

Land means gifts of nature that help production. • It includes soil, water, forests and minerals. • It cannot be moved from one place to another. • Its quality differs from place to place. • The reward for land is rent.

Labour

Labour is the human work done on a farm. It includes a worker's physical effort and a farm manager's mental effort.

Labour is all human effort, physical and mental, used in production.

People supply labour when they clear land, plant maize, feed chickens or plan farm activities. • Family labour comes from the farmer and family members. • Hired labour comes from workers employed by the farmer. • The reward for labour is wages.

Capital

Capital includes things made by people to help production. Hoes, tractors, poultry houses and irrigation pumps are examples.

Capital is wealth set aside for the production of further wealth.

Capital helps farmers produce more goods. Money can be used to buy these farm resources. • Fixed capital lasts for many production cycles, such as a tractor or farm building. • Working capital is used up during production, such as seeds, fertilisers and animal feed. • The reward for capital is interest.

Entrepreneur

An entrepreneur organises the farm business and accepts the risk of loss. For example, a poultry farmer in Ibadan decides how many birds to keep and how to sell them.

An entrepreneur is a person who combines the other factors of production and bears the risks of the business.

The entrepreneur brings land, labour and capital together to run the farm. • Makes decisions about what and how to produce. • Organises and supervises farm activities. • Bears business risks, such as falling selling prices. • The reward for the entrepreneur is profit, but the business may make a loss.