AGRICULTURE

AS
A
BUSINESS
 Factors of Production
When starting a business, four factors need to be
considered. These are called factors of production.
There are four factors of production
1. Land

2. Labour

3. Capital

4. Management
LAND
 Land
 Land is the primary requirement to start a business
 Land provides a site where production takes place
 One problem with land is its availability
 The size of the land remains the same while the
population is increasing.
 Agriculture competes with housing and industry for
land
 Many farmers work on land that are rented or leased
 Topography of the land is also possess a problem to
farmers
LABOUR
 Labour
 Labour is the human effort used in production.
 There are three types of labour
1) Operator Labour – This is where the farmer does
everything. This form of labour is not very efficient
2) Family Labour – This is where a farm is run by a
farmer and members of his famiy. This is efficient in
certain types of farm e.g. poultry
3) Hired Labour – There are two types of hired labour
 (i) Permanent
 (ii) Temporary
 Problems with Labour in Agriculture
 Rural – Urban Drift
 Psychological Attitude
 Low Wages
 Absenteeism
CAPITAL
 Capital
 Capital refers to all cash, buildings, machinery,
equipment, materials, tree crops and livestock
 There are two types of capital
 Fixed Capital – refers to assets that are not used up in
the production of a product e.g. land, building and
machinery
 Working Capital – refers to assets that are used to
convert raw material into a product. E.g. feed, fuel ,
cash
 How does a farmer obtain capital
 Savings
 Commercial Banks
 Agricultural Banks
 Co-operatives
 Credit Unions
 Management
 Management combines the other three factors of
production of land, labour and capital
 Management determines the success or failure of a
business