A presentation on Effect of recession on agriculture

Presented By: Vandana Chandra MBA IVth Semester

What is Recession……???

Before, understanding “RECESSION” we need to understand the market economy:

Two stages of market economy

Two factors of market - demand & supply

Two stages of market economy

Growing market economy

Declining market economy

Growing market economy (the upward trend)
Stock market rises, overall Which finally leads to With more money, Investors buy more Stock & consume More goods & services Which leads to

Which leads to

Investors believe trend Will continue, so value Of stock increases.

In response to Increased demand, Producers hire more People & consume More raw material. Which leads to

Which leads to

Increase employment Means even more people Can buy stuff.

Consumers feel confident In the future of the Economy, so they buy More stuff.

Declining market economy (the downward trend)
Which leads to Consumers do not feel Confident about the economy, So they buy less stuff.

In response to decreased Demand, producers lay Off people & decrease Consumption of raw mat. Which leads to

Which leads to

Employed workers fear they Will loose their jobs, so they Spend less money. Which leads to

Unemployed workers have Less money to spend, So demand decreases Further.

Investors fear the value of stocks Will decrease, so they are less Which finally leads to Stock market fails, overall. Willing to invest in new companies

Two factors of market – demand & supply

PRODUCERS, wants his demand, to be high always. CONSUMERS, wants his buying cost to be low.

Demand is the price at which consumer is ready to buy, & producer is ready to sell.

Recession…..???

Recession, means the economy is shrinking for two consecutive quarters, i.e. 6 months, with a decrease in the G.D.P., i.e. Gross Domestic Product.

GDP = Value of all reported goods & services produced by the people operating in the economy.

If GDP, is growing, then market is growing due to Increased demand.

Why recession happens…???

Over production

Low confidence level

Why recession happens…???
Over production

Pseudo demand actual need was not There, wrong Projections.

A situation in which the supply Exceeds the nation’s Ability to consume what Has been produced. Supply > demand

Companies produced more

Low confidence level…
Low confidence level Word of mouth Consumers are fearing that they may loose Their jobs, so they have less confidence to spend money & buy goods. This will Result in reduction in demand in the Market. Consumers start saving money Instead of spending it. This is a downward Trend in the economy Producers do not stock material; they Reduce their production, gets into cost Reduction activities. They get worried About their profitability. Word of mouth

Low confidence level Of millions of Consumers & Producers after They hear about The various job cuts, Demand comes Down, companies Become Bankrupt.

How to know its recession…???

• people buy less stuff. • decrease in factory production • growing unemployment • slump in personal income • an unhealthy stock market

Other indicators of recession….
Population increasing Pressure on Food supplies

Moves towards enclosures

Factors that may suggest that there was a crisis

Inflation, Lower wages

Specialized farming

Changes in Economic Climate e.g. Cloth industry

Developments & difficulties in Agriculture

Development of specialized farming. for e.g. dairy farming, which lead to shortages of grain. Main shift towards sheep & cattle due to demand for wool & leather. A move away from grain production, because a profitable situation could be seen in the production of wool & leather. Enclosures seen by the contemporaries as the cause of all the problems of agriculture. (which include higher grain prices, periodic food shortages, etc.) However, other factors like bad weather leading to poor harvests could not be ignored.

Contd…

Indian agriculture has not impacted by global economy crises, except some export oriented crops. India’s workforce depends on agriculture and he expects a bumper crop this year and feels it will continue to grow at a robust space. About 60-65% of India’s population and workforce depend on agriculture and agriculture continues to grow at a robust pace. The rabi crop is the main agricultural crop in India. In terms of sown area of wheat; we have already sown 2.69 million hectares as against last year’s 2.19 million hectares on the corresponding date. The monsoon had been good.

How to come out of recession…???
Fiscal policy Govt. influences the economy by changing how it (govt.) spends & collects money.

Tax cuts for Businesses Or for individuals

More money Available For spending

More spending By govt. to Create jobs.

Individuals Get salary & They spend money Some income For Unemployed People to spend

Demand picks Up; market can Recover.

Automatic Fiscal policy; Unemployment insurance

How to come out of recession…???
Monetary policy Govt. manipulates the available supply of money in the country

Reduce Reserve ratio

More money Available For banks To give loans Individuals Take more loans It becomes An income to Govt. to Inject money In the market

Lower the Interest rates

Demand picks up; Market can Recover.

Use its Own Reserved Money to buy Govt. bonds

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