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Agricultural Science for CSEC ® Examinations MACMILLAN

Ronald Ramharacksingh Series Editor: Dr Mike Taylor

Agricutural

I

Science for

CSEG

® hmutigHs

Ronald Ramharacksingh

CSEC is a registered trade mark of the Caribbean Examinations Council (CXC). Agricultural Science jr CSEC Examinations

is an independent publication and has not been

authorised, sponsored, or otherwise approved by CXC.

MACMILLAN

Series preface

ix

About this book

x

Section A: The Business of Farming 1 The role and importance of agriculture 1.1 1.2 1.3 2

3

The importance of agriculture in national, regional and international economies Career opportunities in agriculture Institutions concerned with agricultural development in the Caribbean

1 2 3 7

Challenges confronting agriculture

15

2.1 2.2 2.3

16 21 26

Local and regional challenges Issues affecting global agriculture Terminology used in food safety, importation and certification

Alternatives to conventional farming

31

3.1 3.2

32 35

Non-conventional farming systems The principles of organic farming

4 Economic factors of production 4.1 4.2 4.3 4.4 4.5

The economic functions of production, consumption and marketing The factors of production Factors of production related to agriculture The 'law of diminishing returns' Demand, supply and price relationships

5 Trade agreements 5.1

The effect of international trade agreements

6 Farm financing and support services 6.1 6.2 6.3

Sources of capital Co-operatives Incentives given to farming

7 Farm organisation and planning 7.1 7.2 7.3 7.4

Farm management and farm records Income and expenditure Partial and complete budgets The relationship between budgeting and decision-making

41 42 44 45 47 51 61 62 68 69 72 75 80 81 84 86 87

Section B: Crop Production 8

Soil and soil fertility Soil formation 8.1 The soil profile 8.2 8.3 The major components of soil 8.4 The physical and chemical properties of major soil types 8.5 The carbon and nitrogen cycles

91 92 95 96 98 104 V

Contents

8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14

The factors affecting soil fertility Importance of minor nutrients in crop production Fertiliser ratio Maintaining soil fertility Composting Soil erosion Different types of soil erosion The causes of soil erosion Soil and water conservation methods

9 Land preparation 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8

The relationship between climate and agricultural production Measuring rainfall and temperature Interpreting weather records Weather records and farming decisions Land preparation methods Machinery used in crop husbandry Care and maintenance Safety precautions when operating tools, machinery and equipment

10 Plant morphology and physiology 10.1 10.2 10.3 10.4 10.5 10.6

The structure of plants Sexual and asexual reproduction in plants Sexual and asexual reproduction in relation to crop production Seed germination Plant processes Environmental factors and plant growth and development

11 Plant genetics, breeding and biotechnology 11.1 11.2 11.3

The principles of genetic inheritance Plant breeding Biotechnology in plant improvement

12 Crop husbandry 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10

Cropping systems Cultural practices associated with crop production The effects of weeds on crops Methods of weed control Pests and crop damage Major crop diseases Pest and disease management Chemicals in the environment Cultivation of vegetable crops Plant quarantine

13 Harvesting and post-harvest practices 13.1 13.2 13.3 13.4 13.5

Post-harvest technology Harvesting crops Harvesting methods Harvest and post-harvest practices for ornamentals From the farm to the table

14 Processing and utilisation 14.1 14.2 14.3 Vi

Reasons for processing crops Food processing techniques Utilisation of processed products

106 108 109 110 113 114 114 115 116 125 126 127 129 131 131 135 138 139 144 145 151 156 157 164 167 174 175 178 181 186 187 189 190 191 193 195 197 198 200 203 208 209 209 210 211 212 216 217 217 222

Contents

Section C: Animal Production 15 Morphology and physiology 15.1 15.2 15.3 15.4 15.5 15.6

The digestive system of a bird Ruminant and non-ruminant digestive systems Functions of the digestive system parts The process of digestion Digestion in rabbits The structure of an egg

16 Nutrition 16.1 16.2 16.3 16.4 16.5 16.6 16.7 16.8 16.9

Nutrients in animal nutrition The balanced ration Appropriate rations for livestock Feed conversion ratio (FCR) The importance of FCR Systems of grazing The advantages and disadvantages of different grazing systems The importance of forages in livestock feeding Forage conservation

17 Housing 17.1 17.2 17.3

Housing requirements for farm animals Housing for broilers, layers and rabbits Bee production and fish farming

18 Animal genetics, breeding and reproduction 18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 18.12

Breeds of farm animals Uses of different breeds of farm animals Animal genetics Breeding systems in animal production The advantages of cross-breeding The principles of genetic improvement Artificial insemination in farm animals Advantages and disadvantages of artificial insemination Terms used in animal reproduction Egg formation and incubation in poultry Embryo transfer Genetic engineering in livestock production

19 Animal husbandry 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 19.9 19.10

The care of young chicks and rabbits Management practices associated with rearing broilers, layers and rabbits Rearing a batch of broilers Animal health Pests and diseases of poultry and rabbits: symptoms, prevention and control The economic importance of bees The types of bees in a hive The social activities of bees Pests and diseases of bees Honey and other bee products

20 Animal products technology 20.1 Animal products and by-products 20.2 The dressing percentage of farm animals 20.3 The slaughter of broilers 20.4 The marketing of eggs and meat

225 226 228 228 229 231 231 235 236 238 239 240 240 241 243 244 247 252 253 254 256 263 264 265 266 267 268 269 270 271 272 274 276 278 285 286 288 289 289 290 291 292 292 293 294 300 301 304 305 306 VII

Contents

Section D: Horticulture (Double Award only) 21 Horticulture 21.1 21.2 21.3 21.4 21.5 21.6

What is meant by horticulture? The importance of horticultural plants The cultivation of horticultural plants Harvesting techniques of horticultural plants Quality requirements for flowers The establishment of lawn and turf grasses

310 311 312 312 316 316 317

Section E: Animal Management (Double Award only) 22 Animal management 22.1 22.2 22.3 22.4 22.5 22.6 22.7

Management practices in the rearing of livestock Preventing food spoilage Principal cuts of meat The quality requirements of meat Safety requirements in the processing of food Value-added products The role of biotechnology in animal production

321 322 330 332 332 333 333 335

School-based Assessment (SBA) component

339

Answers to multiple choice questions

372

Index

373

VIII

This book isn't just words on a page. Here are some important features. Each will help you, if you take advantage of it. There are two columns. The bigger column has the text and some really large diagrams; you can read straight down it without interruption. The smaller column has other diagrams which the text mentions. Look at them carefully as you need them. You may find that looking at a diagram for a few seconds is worth a few minutes of reading. The first time that an important new word occurs, it is repeated in the smaller column. If you want to check what a word means, you can find it quickly. There are questions called ITQs (In-Text Questions). When you have read the nearby text, try to answer the question, in your head or on paper. If you can, you're on the road to understanding. If you can't, just go back and read that bit again. Answers to ITQs are at the end of each chapter, so you can tell how good your answer was. At the end of each chapter there are some examination-style questions. Your teacher will suggest how you can use them. Some are multiple choice questions, and the answers to these can be found at the end of the book. Whether for the Single or the Double Award, you have to present an SBA involving practical work and the production of a record of what you have done, including a financial analysis. The last chapter has a detailed explanation of what is expected, an explanation of how you might set about the practical work and what is important in it. There is a detailed index. Don't be afraid to use it to find what you want!

X

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..........

e and IrilOndi10E Of (use By the end of

3

this chapter you should be

understand that agriculture is important in national, regional and international economies

3

able to:

li st the various career opportunities and levels of training in the agricultural sector

3

know and understand the functions of local, regional and international institutions concerned with agricultural development in the Caribbean.

Concept map Role of agriculture

Economic importance

Regional

Career opportunities

National

-food security

[-employnt contribution to GNP

journalism

food production

International

-foreign exchange -trade liberalisation

agro-processing

education

certification

sales and marketing

Agricultural development

Local

Regional

Ministry of Agriculture

-CARICOM -CFNI -CDB -CARD! -UWI -CASE -ECIAF -GSA

quality control

management

International

-EU -IICA -FAO -OAS I DB -CIDA

engineering

food inspection

services

1

Section A: The Business of Farming

1.1 The importance of agriculture in national, regional and international economies agriculture ►

Distinguish between 'agriculture', 'farming' and 'husbandry'.

List as many different types of agricultural production as you can think of, focusing on those found in the Caribbean.

The word agriculture comes from the Latin agri cultura, meaning 'cultivation of the field'. It covers all the arts, skills, sciences, industries and services used by humans to obtain food from the land. This includes the cultivation of crops and the rearing of livestock, together with the related industries supplying seeds, chemical fertilisers, machinery, finance and technology. In addition, agriculture involves marketing and processing. Often 'agriculture' is used to mean the same as 'farming' and 'husbandry'. But farming and husbandry have more to do with specific activities such as dairy farming, crop husbandry, organic farming, livestock husbandry, mixed farming and exotic farming. Traditionally, agriculture has been recognised as the art of tilling the soil and a way of life for families in rural communities. With modern technology and a rising world population, agriculture today is seen as an art, a skill, an applied science, a multi-faceted discipline, a business and a vocation, focused primarily on food production.

Foreign exchange earnings Agriculture is very important to the economies of all Caribbean countries, both regionally and internationally. When Caribbean agricultural goods and services are sold to other countries, foreign exchange ► foreign exchange is earned. For example, the export of bananas and coffee earns foreign currency. However, when foreign agricultural goods and services are imported, Caribbean currency is converted to foreign exchange; importing agricultural machinery from abroad is therefore a loss to the local community.

Contribution to Gross National Product Gross National Product (GNP) ► The Gross National Product (GNP) is a measure of the current value of goods and services from all sectors of the national economy. Agriculture is a vital sector of the national economy and contributes to the GNP.

Food security food security ► Food security means being self-sufficient in food. Most Caribbean countries are now boosting their local food production and reducing food imports. In the Caribbean, food security is affected by: • low agricultural productivity, resulting from inefficient use of water and other inputs • a decline in earnings from traditional crops resulting from the loss of trade preferences • a dependency on imported food resulting from the inability to produce food locally at competitive prices • increased poverty in many countries because of a loss of agricultural jobs. Food security can be promoted by initiatives to improve food production and marketing, expand trade opportunities, increase income and improve nutrition.

Employment ratio of imported food to local produce The agricultural sector can provide employment for many people. There is a wide range of job opportunities, such as farming, agricultural education, marketing, engineering and farm management. Improved agricultural production improves the employment prospects of a region — if more food is grown locally then more jobs

2

1 - The role and importance of agriculture

are created. Impo rt ing food from abroad reduces the number of local ag ri cultural jobs. There is also concern about the quality of some of the food impo rt ed into the Ca ribbean. It is thought that some impo rt ed food may be responsible for an obesity problem within the population.

National and regional plans for agricultural development agricultural plans ► Agricultural plans are policy documents, prepared by governments, private firms or international organisations, setting out plans for agricultural development. Normally, local or national plans are prepared by the government of each Caribbean country for a five-year period. The plan for each country identifies the areas of agriculture which need attention and may specify the current status, constraints, strategies and resources required for the development of each area. Carefully prepared plans can bring about agricultural development and national development. Regional plans for agricultural development are produced through the cooperative effo rt s of Caribbean countries, based on the agricultural needs of the region. Specific goals, objectives, constraints, strategies, resources and evaluation procedures help to put the plans into practice.

Trade liberalisation Trade liberalisation helps global competitiveness. A fair trade in goods and services tariff ► develops through removing tariffs and non-tariff bar ri ers. A tariff is a tax levied by a government on imports (or occasionally expo rt s) for purposes of protection, suppo rt trade liberalisation ► of the balance of payments, or the raising of revenue. Global trade liberalisation initiatives encourage greater efficiency in marketing and trade by restructuring trade policy regimes to reduce the level of protection from competition. ^+y'7 Trade liberalisation does not just depend on the removal of barriers and the Make a list of the major roles of agriculture in the negotiation of better access conditions. It requires rules which define the framework economy of a count ryfor each government in the formulation of their trade policies. This should result in each country being encouraged to improve productivity in agriculture and making Q_ greater efforts to improve the quality of agricultural products.

T^

Explain what is meant by food security'. ' How does importing food reduce the number of job oppo rt unities?

Practical activity: Look at some national, regional and international statistical repo rt s about food production, impo rt s or expo rt s.

1.2 Career opportunities in agriculture Careers in agriculture include: • food production • sales and marketing

• services • food inspection and quality control • agro-processing • engineering

• • • •

education journalism management and administration certification.

Some career areas extend beyond the agricultural sector: sales and marketing, services, engineering, management and administration can all be associated with many other industries.

3

Section A: The Business of Farming

Food production The most specialised careers in agriculture are associated with the production of crops and the raising of livestock (see Table 1.1). Occupation Labourers

Job description Unskilled workers who work for farmers; involved in ploughing, planting, harvesting, looking after animals,

Farmers

Farmers cultivate their land, grow crops, raise livestock and sell their produce. They liaise with advisors and are aware of new developments and methods of production so that they can make efficient use of land and resources,

Overseers/ Managers

Have responsibilities for specific areas on large farms. They may do the same work as farmers, but will be in charge of teams of labourers and may specialise in crop production or raising animals. Extension officers are advisors who inform farmers about the latest developments in machinery, equipment and farming techniques. They work with researchers to tell them what farmers need to be more productive. They provide a means of communication between researchers and farmers. These include: engineers developing new farm machinery; chemists developing new fertilisers and pesticides; biologists researching new breeds of animals and new types of crop plants. Research is carried out in laboratories and institutes, employing other staff such as laboratory technicians, Figure 1.1 shows research workers in the field. Vets care for sick animals and are also responsible for testing for diseases in animals. Veterinary nurses help the vets in their work.

Extension officers

Research workers

Veterinarians (vets)

Agricultural engineers

Viticulturists

Plan, supervise and manage the building of agricultural projects, including drainage schemes, food processing plants and structures for housing livestock. Many work for government agencies or are involved in research which involves designing new agricultural equipment. Specialists in managing vineyards; require a knowledge of grapes, their growing conditions, when to harvest and prune. Can be involved in research developing new techniques for culturing vines and breeding new varieties,

Qualifications needed A basic knowledge of tools and machinery is useful to gain employment. An NVQ level 1 qualification could be helpful. Farmers need a basic knowledge of agriculture, the use of tools and machinery and the ability to keep records and to control their finances. They need training to secondary level, studying to NVQ level 2 or CXC in Agricultural Science. Overseers and managers need the same skills as farmers, together with the ability to deal fairly with the workforce (the labourers). Diploma, Associate Degree or Bachelors Degree in Agriculture.

Usually a research worker will have a university degree in a science subject, e.g. Biology, Chemistry, Physics or Engineering. Laboratory staff are trained to secondary level and have good grades in CXC science subjects. Vets need a university degree in Veterinary Medicine. Veterinary nurses need qualifications: at least CXC in science subjects. A university degree in Engineering.

Need a basic knowledge of agriculture, with specialist knowledge of grapes. Qualifications vary from diploma level to a university degree in Horticulture or an agricultural subject, depending on level of responsibility.

Table 1.1 Some careers in food production.

Sales and marketing Agricultural produce is sold in shops, supermarkets or on market stalls (see Figure 1.2). It usually has to be transported from farms to the wholesalers and from there to retailers and other outlets. All this involves loaders and drivers. At the wholesalers, produce may be stored for some time, providing employment for storekeepers, clerks and security officers. Managers, cashiers and sales personnel become involved when produce reaches the shops.

Figure 1.1 Agricultural scientists carrying out some field tests on plants.

4

1 • The role and importance of agriculture

Services The jobs associated with servicing any industry include technicians, drivers, electricians, plumbers and mechanics. Very few of these jobs require specialist knowledge of agriculture, although some mechanics and technicians may develop expertise in dealing with agricultural machinery.

Food inspection and quality control These are very important aspects of food production, both for fresh produce and for processed food. Lack of inspection and poor quality control procedures result in inferior produce and health hazards. Careers in these areas require training and qualifications to at least NVQ or equivalent level. Qualified people may be employed in agro-processing or by government agencies.

Agro-processing Figure 1.2 An agricultural market stall.

Agro-processing involves turning agricultural produce into products (preserved fruits, jams, wines and sauces), which can be marketed locally, nationally or exported. The employment opportunities are numerous. They range from unskilled labour (in processing and packaging plants) to biochemists and quality assurance officers who have professional qualifications.

Engineering Agriculture depends on mechanisation to become more efficient. Transport of produce and animals from farms to processing plants is essential and increasingly processes are becoming mechanised. Harvesting of many crops is done by machinery, rather than by hand. Ploughing, sowing, spreading fertilisers and spraying with pesticides can all be done mechanically, thus saving time and reducing the cost of labour. Engineers are employed to develop and maintain machines. New techniques in processing and preserving food require machines which are designed and manufactured by engineers.

Education Education is vital to agriculture at all levels — from schools to colleges and institutes, through to university. In schools, pupils are made aware of agriculture and the environment (see Figures 1.3 and 1.4). Figure 1.4 on page 6 shows a land laboratory in a school. This is an area where many different types of crops are grown.

Figure 1.3 An agriculture teacher and her students examining a mango tree.

5

Section A: The Business of Farming

Figure 1.4 A land laboratory (secondary school).

Agricultural Science is a core subject in junior secondary schools, laying a foundation for further agricultural training. In senior secondary schools, different agricultural courses are offered. Some students prepare for Agricultural Craft subjects; others prepare for the Caribbean Examination Council (CXC) Agricultural Science qualifications. Vocational courses, such as associate degrees in Agriculture and Forestry, are offered at the Eastern Caribbean Institute of Agriculture and Forestry (ECIAF) in Trinidad and Tobago and at other institutions in Jamaica, Guyana and St Lucia. In Trinidad and Tobago, the Ministry of Agriculture, through the Extension Services, offers a wide range of short courses for farmers. The University of the West Indies ( UWI) offers degree courses in many agricultural and associated topics. There are also opportunities for postgraduate training leading to higher degrees. There are job opportunities for well-trained teachers, together with support staff, in all these institutions.

Journalism Journalism in the agricultural sector can suit those who write clearly and have an interest in agriculture and the environment. Journalists contribute to agricultural journals and magazines, government documents, information leaflets and instructions. Photography and graphic design also provide rewarding careers. Qualifications vary, but experience and a detailed knowledge of the subject matter are essential.

Management and administration Make a list of the personnel required to organise and run a retail outlet selling agricultural produce.

A farmer has a contract to supply a supermarket chain with salad vegetables. Make a list of the different jobs involved in harvesting, packaging and transporting his produce to the supermarket.

Practical activity: Choose a career or career area that interests you. Investigate the qualifications required and employment opportunities available.

6

Businesses and organisations require good management, so managers and administrators are needed in all sectors of agriculture. Small farms can be run by a farmer, but large farms employ managers to take charge of the organisation of labour and resources. There will be employment opportunities for administrators and managers in all other aspects of the industries and institutions associated with the agricultural sector. For example, wholesale and retail outlets, schools and colleges need administrative staff at all levels, including secretaries and accountants.

Certification Qualifications are important in any career and can lead to employment at a higher level. Many schools and colleges organise courses leading to qualifications in the agricultural sector. On completion of the course and following an examination, these institutions issue certificates, diplomas or degrees stating the level of expertise reached. In schools, examinations are organised by the Caribbean Examinations Council. In other institutions, the examinations are organised by the college or university. All these examinations are set and judged by experts with a good knowledge of their subject. To gain employment in this area, years of experience of teaching the subject are required.

1 •

The role and importance of agriculture

1.3 Institutions concerned with agricultural development in the Caribbean Local institutions Local institutions, both governmental and non-governmental, are essential for any modem agricultural economy. The quality of the support mechanisms determines the quality of the agricultural output. More importantly, it creates a sound foundation for new initiatives, growth and expansion in the agricultural sector. Each Ministry of Agriculture is divided into several divisions which work in collaboration with affiliated agencies, farmers' organisations and commercial agribusinesses to provide support services to farmers and agriculturalists for agricultural development. In Trinidad and Tobago, the Ministry of Agriculture, Land and Marine Resources consists of 11 divisions (see Table 1.2, overleaf), each having responsibilities for different aspects of agriculture, planning and training. r: What are the functions of the Forestry Division of the Ministry of Agriculture? (see Table 1.2)

What are the functions of the Extension, Training and Information Division? (see Table 1.2)

Practical activity: Visit your local regional administration office and find out how it helps the farmers in your area. You could ask for advice on irrigation schemes, or how to prevent and control diseases in crops grown locally. Figure 1.5

An agricultural research station dealing with livestock improvement.

A demonstration farmers are shown how to carry out a procedure. Figure 1.6

7

Section A: The Business

of

Farming

Name of Division

Functions

Planning Division

• • • • • • • • • • • • • • • • • • •

Project Implementation Unit Land Administration Division

Research Division (see Figure 1.5, overleaf) Agricultural Engineering Division Agricultural Services Division

Forestry Division

Fisheries Division

• • • • • • • • • • • • • •

Extension, Training and Information Division (see Figure 1.6, overleaf) Animal Production and Health Division

Regional Administration Divisions (North/ South)

• • • •

identify goals and objectives determine the Ministry's vision and mission formulate plans and policies collaborate with other Ministries and agricultural organisations identify major agricultural projects determine the order of priority and cost projects implement agricultural projects systematically co-ordinate the implementation process and keep records provide advice and information on agricultural state lands handle lease assignments and transfers collaborate with the Lands and Surveys Department monitor the terms and conditions of leased lands through visits and record-keeping repossess and re-advertise state lands for lease conduct laboratory tests and analysis of soils, pests, diseases and livestock feeds provide technical advice, information and solutions to farming problems conduct trials on improved crop varieties and exotic farm animals issue import permits and quarantine plants and animals for observation, treatment and certification provide advice and information on agricultural machinery and equipment advise farmers on designs of farm ponds, livestock buildings, irrigation and drainage projects and access roads propagate and sell planting materials (plants, seeds, cuttings, tubers, rhizomes) to farmers cultivate and sell farm produce: wet cocoa beans, bananas, citrus, mango, avocado, sapodilla and pommecythere produce and sell honey, queen bees and starter colonies propagate and sell forest plants (teak, Caribbean pine, mahogany, cedar) to farmers manage forest reserves, parks, forested recreational areas and wildlife maintain demonstration areas of agro-forestry and silviculture undertake reafforestation of watersheds and deforested areas issue permits for hunting and keep records of animals caught provide technical advice and information to farmers on forestry establishment and management sell forest trees to sawmillers and supervise harvesting operations conduct registration of fishermen and aquaculturalists process applications for the importation, registration and transfer of commercial fishing vessels and engines issue permits for the import/export of fish (ornamental and food) and seafood provide technical advice, assistance, information and training courses for fishermen and aquaculturalists organise and conduct technical training on a wide range of agricultural courses at the Farmers' Training Centre, Centeno provide technical advice and information to farmers publish and supply technical information bulletins and factsheets on crops and livestock conduct extension training at all agricultural county offices

• provide surveillance of livestock farms for the diagnosis, treatment, prevention and control of animal diseases • conduct laboratory tests and post-mortem examinations (necropsy) of farm animals • control vampire bats against the transmission of paralytic rabies in livestock • develop and implement preventive medicine programmes for animals • provide technical advice, information and artificial insemination of cattle • produce and sell farm animals, goats, cattle (culled, injured) to interested persons • process applications for farmers' identification and agricultural incentives at agricultural county offices • provide advice, information and assistance on access roads and designs of farm ponds, irrigation, drainage and livestock buildings • monitor and control destructive agricultural pests and diseases • provide technical assistance in managing apiaries and bee abatement (nuisance, swarms) • sell seeds produced lo cally at Chaguaramas, Trinidad

Table 1.2 The functions of the divisions of the Ministry of Agriculture, Trinidad and Tobago.

8

1 • The role and importance of agriculture

Regional institutions There are many institutions in the Caribbean concerned with agricultural development. Some give advice and support, whilst others provide specialised training for careers in the agricultural sector.

The Caribbean Community Caribbean Community The Caribbean Community (CARICOM) is an organisation of 15 Caribbean nations (CARICOM) ► and dependencies. It promotes economic integration and co-operation. CARICOM carries out these functions: • co-ordinates economic policies and development planning • sets up special projects for less-developed countries • operates as a regional single market for many of its members (Caricom Single Market) • handles regional trade disputes.

The Caribbean Food and Nutrition Institute Caribbean Food and Nutrition The Caribbean Food and Nutrition Institute (CFNI) aims to describe, manage and Institute (CFNI) prevent nutritional problems facing Caribbean countries. It runs training courses, conducts research programmes on food and nutrition and maintains a library. Research areas include: • reduction of under-nutrition in children • prevention and control of diet-related chronic diseases • control of iron deficiency anaemia • i mprovement of household food security.

►

The Caribbean Development Bank Caribbean Development Bank The Caribbean Development Bank (CDB) assists Caribbean nations in financing (CDB) projects for its members. Its purpose is to contribute to the economic growth and development of member countries and to promote economic co-operation and integration. Its main functions are to: • assist members in the co-ordination of their development programmes with a view to achieving better utilisation of their resources, making their economies more complementary, and promoting the orderly expansion of their international trade • mobilise additional financial resources for the development of the region • finance projects and programmes contributing to the development of the region • provide technical assistance to regional members • promote private and public investment in development projects • stimulate and encourage the development of capital markets within the region.

►

The University of the West Indies University of the West Indies

The University of the West Indies (UWI), Faculty of Science and Agriculture, (UWI) ► offers a wide range of courses leading to qualifications (from diplomas to postgraduate degrees). Qualifications can be obtained in Natural Sciences, such as Life Sciences and Chemistry, and aspects of agriculture, such as Animal Science, Food Production, Economics and Extension Services. In addition, research units investigate specific problems relating to crop and livestock production.

9

Section A: The B usiness of Farmjn., Section A: The Business of Farming

Caribbean Agricultural Research and Development Institute (CARDI) ►

College of Agriculture, Science and Education (CASE) ►

Practical activity: Imagine that you are an entrepreneur and wish to establish a forestry business. Work out which institutions you would need to consult in order to finance it and find suitably qualified staff.

The Caribbean Agricultural Research and Development Institute The Caribbean Agricultural Research and Development Institute (CARDI) conducts research and demonstrates appropriate technologies to farmers. CARDI provides technical assistance in areas such as: • crop production, integrated pest management (IPM) and farming systems • livestock and forages • environmental and soils management technology services, e.g. Figure 1.7 Goat rearing (a CARDI project). the supply of quality plant products and genetic products and services market research and statistical services business development and consultancy. The College of Agriculture, Science and Education The College of Agriculture, Science and Education (CASE), in Jamaica, is a multidisciplinary tertiary level educational institution offering diplomas, associate degrees and Bachelor degrees. Of particular relevance are its Bachelor degree courses in Business Studies, Environmental Science and Agri-production and Food Systems Management. There are associate degree courses in General Agriculture, Agricultural Education, Natural Science and Business Studies. There are also courses leading to diplomas in Agriculture and teaching qualifications. The Department of Animal Science helps to increase productivity of livestock, and the Department of Plant, Soil Sciences and Engineering provides training in Agronomy, Plant Science, Soil Science, Horticulture, Land Surveying, Plant Protection and Crop Production. The diploma in Agriculture was designed to train skilled practitioners in specific areas of agriculture, who would put their training into practice on farms and in other agricultural enterprises. An Associate of Science degree trains students to be highly competent farmers and 'agri-preneurs'. This qualification enables graduates to enter most jobs that require a knowledge of agriculture.

The Eastern Caribbean Institute of Agriculture and Forestry Eastern Caribbean Institute of The Eastern Caribbean Institute of Agriculture and Forestry (ECIAF) provides Agriculture and Forestry (ECIAF) ► courses that last two years and lead to diplomas in Agriculture, Forestry and Agricultural Education. Completion of a diploma enables students to gain employment in agriculture, forestry or education, or to enter other courses in higher education if they wish to. Guyana School of Agriculture ( GSA) ► T

8

What is the role of the University of the West Indies in agricultural development in the Caribbean? 10

The Guyana School of Agriculture The Guyana School of Agriculture (GSA) provides training to certificate anc diploma level in agriculture. The one-year course leading to a certificate in Forest» trains students to become forestry technicians and teaches them the principle of sustainable forestry. A two-year certificate course equips young people fo careers in farming. The diploma courses last for two years and lead to careers a Agricultural Science teachers or agricultural field assistants. These courses are ii Agriculture, Animal Health, Veterinary Public Health and Livestock Productio and Management.

1•

The role and importance

of

agriculture

International institutions The Caribbean nations are part of the global economy — agricultural development therefore depends on international institutions as well as local and regional organisations.

The European Union European Union (EU) ► In October 2008, the 27 members of the European Union (EU) and 15 Caribbean nations signed an Economic Partnership Agreement (EPA). It included measures to stimulate trade, investment and innovation, and to promote sustainable development, build a regional market among Caribbean countries and help eliminate poverty. The effect will be to open up markets for produce from the Caribbean countries by removing tariffs and encouraging trade liberalisation. The agreement is important for the economies of Caribbean countries and encourages fair trade for commodities such as sugar, coffee and bananas.

The Inter-American Institute for Co-operation on Agriculture Inter-American Institute for The Inter-American Institute for Co-operation on Agriculture (IICA) is an Co-operation on Agriculture institution for agricultural research and graduate training in tropical agriculture. (IICA) ► It was founded in response to changing needs in the Americas and has evolved into an agency for technical co-operation in the field of agriculture, promoting agricultural development and rural well-being. The IICA supports and encourages: • agro-energy and bio-fuels • biotechnology and bio-safety • rural communities • trade and agribusiness • trade negotiations • institutional modernisation • technology and innovation • environmental management • agricultural health • organic agriculture.

The Food and Agriculture Organisation Food and Agriculture Organisation The Food and Agriculture Organisation (FAO) of the United Nations leads (FAO) ► international efforts to defeat hunger. It helps countries to modernise and improve agriculture, forestry and fisheries practices and ensures good nutrition for all. Within the organisation, there are departments for: • agriculture and consumer protection • economic and social development • fisheries and aquaculture • forestry • natural resources management and environment • technical co-operation. There are regional, sub-regional, country and liaison offices worldwide. There is a sub-regional office for the Caribbean in Barbados and country offices in many

Caribbean countries. The Organisation of American States Organisation of American States ( OAS) ►

The Organisation of American States (OAS) is made up of 35 independent nations of the Americas. It was founded in 1948 with 21 members, but expanded to include the independent Caribbean nations. The goal of member nations was to 'achieve an order of peace and justice, to promote solidarity, to strengthen collaboration, and to defend sovereignty, territorial integrity and independence'. It seeks to promote economic, social and cultural development and to eradicate extreme poverty.

11

Section A: The Business of Farming

The Inter-American Development Bank Inter-American Development Bank The Inter-American Development Bank (IDB) is an international organisation (IDB) ► established to support Latin American and Caribbean economic and social development and regional integration. It is the largest multilateral source of financing and lends money mainly to governments and government agencies. The bank is owned by 47 member states of which 26, including the Caribbean countries, can borrow money and 21 others cannot. There are some criticisms of the way in which it works. Some of the projects are considered to be damaging to local environments and local people. The Canadian International Development Agency Canadian International The Canadian International Development Agency (CIDA) is the federal body that Development Agency (CIDA) ► funds assistance to developing countries in the form of goods, services, the transfer of knowledge and skills, and humanitarian relief in emergencies and for natural disasters. CIDA advises on many topics including: • food • nutrition • agriculture • rural development • fisheries • co-operatives • forestry • water management • the environment • health and population. r

Explain what the following sets of initials represent: II CA; FAO; CIDA.

How is the European Union concerned with

agricultural development in the Caribbean?

Practical activity: Choose one of the international institutions and find out more about its impact on agricultural development in the Caribbean using the Internet. Design a poster that could be displayed in the local agricultural county office informing farmers of the functions of the institution and how it affects them.

12

1

Experts broaden the scope of the CIDA beyond financial support and help developing countries to take charge of their own economies. In addition, skilled workers and technicians are sent to developing countries. Trainees may also take up scholarships in Canada. CIDA funds many projects, such as: • providing supplements to children with vitamin A deficiency • global immunisation programmes • supporting HIV/AIDS prevention, education and care.

• Agriculture covers a wide range of subject areas and is therefore a 'multi-faceted discipline'. • Agriculture is a key sector of the Caribbean economy. It makes a significant contribution to the GNP and to foreign exchange earnings. • The production of food locally is encouraged so that more opportunities for employment are created. • Careful planning is needed to bring about agricultural development and boost the national economy and regional economy. • Global trade liberalisation encourages improvement in agricultural productivity, greater efficiency in marketing and fair trade for goods and services. • There are many career choices in the agricultural sector; there are employment opportunities for skilled and unskilled people in all aspects of food production and marketing. • The Ministry of Agriculture in each Caribbean country, together with other agencies and institutions, provides support services for agricultural development. • In the Caribbean, there are institutions providing advice and support to the agricultural sector, as well as some which provide specialised careers training. • Caribbean countries are part of the global economy; their agricultural development depends on contributions from international organisations.

1 The role and importance of agriculture

ITQl

'Agriculture' is the general term used for food production and its associated activities. Traditionally, the term was used to describe the tilling of the soil, but it now includes the cultivation of crops, the rearing of livestock and related industries such as technology, processing and marketing. 'Farming' is also used as a general term, but is usually qualified to describe the type of farming: dairy farming, organic farming, mixed farming. 'Husbandry' describes a specialisation in growing crops (crop husbandry) or raising animals (livestock husbandry).

ITQ2

This list can be extensive: bananas, maize, sugar cane, etc. It would be useful to make a list for your area of the Caribbean.

1103 The major roles of agriculture in the economy of a country are: food security, foreign exchange earnings, contribution to GNP, employment, trade liberalisation. ITQ4 Food security is encouraging self-sufficiency by promoting and improving food production and marketing. This will expand trade opportunities, increase the national income and improve nutrition. Food security should reduce dependence on imported foods by promoting the development of food production locally. ITQ5

Growing food locally reduces the need for imported foods. It provides employment for farmers, labourers, engineers and in agro-processing. Importing food cuts down on the number of jobs in farming and associated industries.

ITQ6

Running a retail outlet selling agricultural produce will require: a manager, an accountant, cashiers, sales assistants, cleaners and drivers.

IT07

Supplying a supermarket chain with salad vegetables would involve: labourers to harvest vegetables, personnel to sort, clean and grade the produce, packers, drivers to transport the produce, engineers to service the vehicles and machinery needed, office personnel to take and process the orders.

ITQ8 The Forestry Division manages forest reserves, carries out reafforestation, issues permits for hunting, sells forest plants and harvested timber, provides technical advice and information to farmers. ITQ9 The Extension Training and Information Division runs agricultural courses at Farmers' Training Centres, provides technical advice to farmers, and publishes technical information bulletins and factsheets on crops and livestock. ITI:11 0 The University of the West Indies provides a number of courses which lead to qualifications in agriculture and agricultural development. It trains scientists and engineers and there are research units investigating problems relating to crop and livestock production. IT011 HCA is the Inter-American Institute for Co-operation on Agriculture. It carries out agricultural research and graduate training in tropical agriculture. FAO is the Food and Agriculture Organisation of the United Nations. It helps countries to improve their agriculture, forestry and fisheries. CIDA is the Canadian International Development Agency which funds assistance to developing countries. It provides technical assistance and advice on a wide range of issues. IT012 The European Union has an agreement with 15 Caribbean nations (the EPA or Economic Partnership Agreement) to stimulate trade. It should open up markets for produce from the Caribbean countries by removing tariffs and encouraging trade liberalisation.

13

Section A: The Business of Farming

Examination-style questions

Multiple Choice Questions Write down the number of the question followed by the letter of the correct answer. You can check your answers on page 372. 1. An extension officer: A carries out research on new pesticides B treats sick animals C is a direct link between the farmer and the agricultural research centre D cultivates land for growing crops 2. An example of agro-processing is: A the manufacture of new fertilisers B producing jam from fruit C ploughing the land D the butchering of domestic livestock 3. Trade liberalisation means that: A fair trade in goods and services is encouraged B market access is restricted C local farmers produce fewer crops D more people are buying locally produced crops 4. The movement of goods and services from the agricultural producer to the consumer is: A transportation B marketing C export D management Short answer and essay-type questions 5. Explain how foreign exchange can be earned from agriculture in the Caribbean. 6. Describe the job of a farmer and outline the desirable qualifications. 7. Explain why food inspection and quality control are important aspects of food production. 8. Outline the work of the Animal Production and Health Division of the Ministry of Agriculture. 9. What are the functions of CARICOM? 10.Describe how regional agricultural projects are funded.

14

1100 1011

...............

21g03 Confron

dgilnIt m By the end of this chapter you should be able to:

3 3 3

explain the factors which affect local and regional agriculture understand the major issues that could possibly affect global agriculture know the terminology used in food safety, importation and certification exercises.

Concept maj.D :

Local and regional issues

Biodiversity

Topography

Global warming

Extension services

Land tenure

-

Food safety

Climate

Infrastructure

-

Global issues

Bio-terrorism

Food security

Good Agricultural Practices (GAPS)

Good Manufacturing Practices (GMPs)

HACCP (Hazard Analysis Critical Control Point)

Environmental degradation

Praedial larceny

Food safety

Environment

Natural disasters

-

Gender issues

—

Sustainable land use

15

Section A: The Business of Farming

2.1 Local and regional challenges The major challenge confronting agriculture is to feed an ever-increasing global population whilst preserving, as far as possible, the natural environment. Improved methods of crop production and livestock husbandry can result in higher yields, but these have to be balanced against environmental degradation. In this chapter, local and regional issues are considered — together with worldwide challenges such as global warming and maintaining biodiversity. In the Caribbean, agriculture is an important part of the economy and a major activity. It is the main livelihood of people in rural districts. Traditional methods of agriculture are labour intensive and time consuming. Any movement towards mechanisation will result in a more financially rewarding industry. In this chapter, we consider some issues which affect the progress of agriculture in our area.

Climate climatic conditions ► Agricultural production is directly affected by climatic conditions. For any period, production may be high or low depending on the weather conditions. There are two distinct seasons: a dry season and a wet season, although the months comprising the two seasonal periods vary slightly in some Caribbean states. In the dry season, there is plenty of sunshine, high temperatures and a shortage of water, especially for crop irrigation. As a result, crop cultivation is not possible in areas where there is no water. The wet season has heavy rainfall, cool temperatures, high humidity. and strong winds, including hurricanes. Farmers are challenged to control pests and diseases, which are more common during the rainy season. In addition, crops and livestock are damaged by floods and strong winds.

Strategies for coping with climate • In the dry season, farmers conserve soil water by cultural practices, such as

can farmers conserve water during the dry season? How

Describe THREE ways in which crops can be protected from wind disasters.

organic mulching, incorporating pen manure and other organic matter into the soil, and transplanting seedlings into concave 'pockets' to keep soil water within the root zone. • In the rainy season, drainage systems are essential. Farmers use cambered beds and ridges for crop cultivation, and practise pruning and staking of crops. • Governments can assist farmers, by means of subsidies, to establish ponds to reduce the disastrous effects of flooding and to store water during the dry season. • Similarly, governments, through the Forestry Division, can help farmers to establish wind-breaks in areas where crops are prone to wind disasters.

Topography topography ► The topography, or external features of the land, affects methods of cultivation and crop production. Farmers prefer to cultivate land which is flat or undulating because movement of machinery and equipment for land preparation, crop harvesting and transportation of produce is easier. However, most of the Caribbean

Figure 2.1 Hilly terrain — machines are difficult to operate in these areas.

16

2 • Challenges confronting agriculture

Explain why farming in mountainous areas is more difficult than farming in flat countryside.

Explain why the mechanisation of farming in the Caribbean is limited.

Practical

ivity:

Visit a local farm and list all the

machinery available and in use. Make another list of jobs which could be done more efficiently if the farmer was able to purchase a machine to perform the task.

is hilly or mountainous. There are no alternatives to the use of manual methods for most field operations in hilly areas. Mountainous areas have shallow topsoil and are prone to soil erosion and landslips. Farmers can carry out strip cropping, cover cropping, contouring and terracing (see Chapter 12). However, these options are not always easy. The erection of barriers of stone, wood or grass is expensive, although these can help to control soil erosion.

Mechanisation in hilly areas Mechanisation allows farmers to complete agricultural tasks more speedily and efficiently. This increases their production and profitability. However, in the Caribbean there is limited use of mechanisation due to hills and mountains. There is some use of machinery: the sugar cane and rice industries in Guyana and Trinidad and Tobago are fully mechanised. Limited use is also made of machinery in land preparation, milking cows, plucking chickens, application of pesticides, weed control and crop irrigation. Across the Caribbean, regional governments and private firms need to introduce mechanisation. This mechanisation should be appropriate for the terrain and reasonably priced for farmers.

Rural infrastructure infrastructure ►

rural-to-urban drift ►

What basic facilities does a rural community need to provide a satisfactory lifestyle for farmers and their families?

In the Caribbean, rural communities have often developed into villages and towns as a result of agriculture. Sometimes the infrastructure has been developed on a planned basis to help farming communities. Infrastructure refers to the basic services and installations needed for a community to function, such as transportation and communications systems, water and power lines, and public institutions including schools. However, nationally and regionally, many rural areas still lack an essential infrastructure. Often there is no incentive for farmers to continue living in these areas, where they experience hardship because of few basic amenities. Roads, a water supply, electricity and telephones, educational, medical and recreational facilities all need to be available. Many rural areas lack shops and public transport systems. Farmers want their families to have a better lifestyle and therefore they often migrate to urban areas. This rural-to-urban drift causes abandonment of agricultural land, absentee farmers, a shortage of agricultural labour and a lowering of agricultural production. The governments of Caribbean countries need to address the needs of farmers in rural communities. Investment in rural infrastructure is the pathway to greater agricultural productivity and food security.

Figure 2.2 An example of rural infrastructure — modern buildings in a rural area.

17

Section A: The Business of Farming

Extension services There is a worldwide pool of technical knowledge about agriculture, gained from developments in science. This knowledge can be used to help agricultural development and food security. With modern communication links and internet Why are the extension officers important to farmers? services, many regional territories have websites from which farmers can access technical agricultural information. extension officers ► Throughout the Caribbean, extension officers make farmers aware of the latest developments in agriculture and encourage them to adopt modem technology. In some countries there are not enough extension officers. In addition, training centres are not always equipped to provide the training and practical Why are farmers reluctant to use new technical demonstrations needed to convince farmers of the benefits of new practices. This knowledge? How can the problem be resolved? results in reluctance to use new technical knowledge without first seeing whether it will really work. Local and regional governments need to train more extension officers and provide well-equipped training centres.

Praedial larceny praedial larceny ► Praedial larceny is stealing agricultural produce, such as crops and livestock, and it causes severe economic losses to farmers. This crime deprives farmers of the opportunity of harvesting what they have planted and nurtured and robs them of hard-earned dollars. This is a problem, especially for farmers who cultivate crops which are easy to harvest (for example, bananas, watermelons, pumpkins, cabbages, corn and cucumbers). Often, farmers or other family members have to stay on the farm day and night, or hire a security officer. The culprits are not always caught. In addition, complaints to the police do not always yield a desirable response. It may be difficult to identify offenders and bring them to justice. The few who have been caught in the act have had low fines imposed by the courts. As a result, some farmers, especially those regularly targeted, have given up commercial farming.

Figure 2.3 Guarding produce against praedial larceny (top); the thief makes his

escape (below). 18

2 • Challenges confronting agriculture

Local and regional governments need to address the problem with strategies such as: • hiring praedial larceny officers (estate police) or encouraging farmers'

What is praedial larceny?

Suggest THREE ways by which praedial larceny can be reduced. land tenure ►

tenant farmers ►

co-operatives to hire praedial larceny officers • conducting regular police checks in rural districts • imposing more severe fines on offenders • raising public awareness of this crime.

Land tenure systems

large parcel of land

Land tenure refers to the rights and conditions under which people hold, smaller parce' own, use, control and enjoy property parcel parcel (land). For the farmer, land is necessary for agricultural production and is a vital resource. Traditionally, parents have handed down land as a legacy to their children. With each generation, sub-division of the land has resulted non-economically viable farming units in fragmentation (see Figure 2.4). Often parcels of land have become too Figure 2.4 Land fragmentation small to be run as economically viable (land is handed down through the generations). farming units. Some landowners are not interested in farming the land themselves, but allow farmers to rent it or enter into a share-cropping arrangement. The farmers who rent the land are known as tenant farmers. Tenant farmers are not always keen on managing the land properly or carrying out soil improvements, because the land is not their own and they can be evicted at short notice.

Loss of agricultural land

I I

Explain the meaning of land tenure',

In the Caribbean, land is a symbol of economic power. As time passes, land often appreciates (rises) in value; it may be used for commercial purposes and housing, provided that approval is granted by the government. Land is a scarce resource: it warrants careful use and land reform policies for state lands and areas that are idle or abandoned by their owners. Each Caribbean state needs to ensure that agricultural lands are identified and mapped out, and also allocated by means of a land tenure system to farmers 'for agricultural production and national food security. In some countries, tougher measures are needed to ensure that good agricultural land is not used for the development of residential areas.

Sustainable land use More sustainable management of land can reverse land degradation and desertification. But management of land resources needs to be improved if it is to address the following problems: loss of soil fertility, reduction in freshwater resources, loss of biological diversity and degradation of coastal ecosystems. sustainable land use ► Sustainable land use is a term which means planning and managing land for agriculture, settlement development, tourism, forestry and livestock. To increase sustainable land use within the region, a partnership of national, regional and I international organisations with farming and forestry communities has been State THREE ways in which management of land proposed. The partnership will look at integrated land use management, appropriate resources needs to be improved, technologies, food security, economic development, and environmental protection.

19

Section A: The Business of Farming

Environmental issues Farmers interact with the natural environment by removing vegetation, tilling the soil, introducing new plant species, spraying with pesticides and modifying microclimatic conditions. Although necessary for food production, environmentalists worry about the harmful effects of these farming practices. The major concerns relevant to agriculture are: • destruction of ecosystems • loss of biodiversity • build up of pollution • pesticide resistance.

Food safety

Explain why food safety is a major challenge affecting agriculture.

More people now travel within the Caribbean region and all over the world for business and pleasure. Some may visit farms abroad and inadvertently bring seed, plant, soil or animal materials into their home country. These materials may harbour pests and diseases which can spread rapidly and cause havoc to domestic agriculture. Nationally and regionally, sanitary and phyto-sanitary (SPS) certification procedures govern the import and export of plants, animals and their products. Normally, licences are issued for import and export purposes. Incoming plants and animals are quarantined for observation, testing and certification of their diseasefree status before release for propagation in the country. Governments sometimes impose restrictions on the import of certain agricultural products, such as poultry (chickens, eggs) and beef, from countries which have experienced 'bird flu' or 'mad cow' disease. Agricultural workers associated with these outbreaks are also monitored to ensure that diseases are not transmitted to other farms and that no agricultural pests • or diseases are brought into their home country.

Natural disasters Each year, Caribbean countries are threatened by loss of life, property damage and social disruption as a result of natural disasters. Tropical storms, hurricanes, tidal waves, heavy rains and droughts have occurred in the last 30 years. Disasters have cost the region billions of dollars and damaged economic health and development. The Caribbean Disaster Emergency Response Agency (CDERA) has developed y a strateg for the management of such disasters, known as the CDM (Comprehensive Disaster Management) strategy. This places emphasis on the benefits of strengthening the infrastructure so that installations are as stormresistant as possible. Investment in roads, drainage systems, electrical and water services, schools and hospitals saves money in the long term, as the cost of clean-up procedures is usually greater and involves rehabilitation and total rebuilding. This strategy depends on persuading individual governments to make investments — this is always a challenge.

Gender issues and agriculture

Figure 2.5 Damage to maize and palm trees following a hurricane.

20

During the colonial era, women in Caribbean countries were paid lower agricultural wages than men (for the same number of hours and type of work). In addition, women were barred from holding managerial positions in the agricultural sector as well as in other occupations. At that time,

2 - Challenges confronting agriculture

I

What do you understand by the term gender equality?

Describe ONE way in which women might be discriminated against in agricultural jobs.

men saw themselves as being superior to women, who played subservient roles in the home and workplace. Most men felt that it was demeaning to take orders from a woman boss or to work under her leadership. In most Caribbean territories, gender issues have been addressed. Although resistance still exists, gender equality is advocated with respect to all occupations, including those which were formerly thought of as exclusive to women, such as nursing, home economics, dressmaking and cosmetology. In the agricultural sector, jobs are advertised seeking persons who possess the requisite qualifications, knowledge, skills and experience, regardless of gender. Of course, where heavy manual labour is concerned the employer is free to select the best person for the particular job.

2.2 Issues affecting global agriculture globalisation ► Globalisation has revolutionised agriculture. It is the process of increasing the connectivity and interdependence of the world's markets and businesses. Globalisation offers farmers access to world markets. Aircraft can now deliver fresh agricultural produce to the industrialised countries from almost anywhere in the world in a single day. In addition to trading opportunities, globalisation allows farmers to access information about new production techniques. What are the benefits of globalisation to farmers? Many issues affect agriculture worldwide. Some of these also affect countries of the Caribbean and they are outlined below. -

Biodiversity biodiversity ► Biodiversity is the variation of life forms (plants and animals) on Earth and the many different habitats (ecosystems) in which plants and animals live together. It is often used as a measure of the health of biological systems. The biodiversity found on Earth today is made up of many millions of biological species, the product of nearly 3.5 billion years of evolution. Three levels of biodiversity have been identified: • genetic diversity — the diversity of genes and organisms • species diversity — the populations of organisms in an ecosystem • ecosystem diversity — the range of habitats on Earth.

Distinguish between genetic, species and ecosystem diversity.

Natural vegetation, such as forest, is often cleared for agricultural purposes; this results in loss of ecosystems with their associated plants and animals. There is worldwide concern about the loss of natural ecosystems in the quest to increase food production and clear land for building. Loss of biodiversity results from changes in terrestrial (land), marine and freshwater ecosystems. Biodiversity also affects air quality, climate and erosion. It is important for countries to conserve biodiversity through public education and awareness.

Global warming The Earth is surrounded by a blanket of air known as the atmosphere, which is made up of many gases. Two of these, carbon dioxide and methane, are called greenhouse gases ► greenhouse gases. In a greenhouse, the glass roof and walls trap the heat energy of the sun and keep it within the greenhouse. A warm temperature is maintained and the enclosed plants thrive. Carbon dioxide and methane in the atmosphere act rather like a greenhouse, greenhouse effect ► producing what is known as the greenhouse effect. When the sun's rays strike the Earth, some heat energy is absorbed and some is radiated back into space. The greenhouse gases in the atmosphere trap the energy and keep it in, warming the air beneath and enabling all forms of life to survive. If this energy was not trapped, it would be too cold to sustain life on Earth.

21

Section A: The Business of Farming

heat energy radiated into space

incoming heat energy

atmosphere • greenhouse gases

I•

methane carbon dioxide

• trapped heat energy creased production of greenhouse gases (carbon dioxide and methane) by: • combustion engines • industry, bush fires • farm animals, hu • burning fossil

some heat energy absorbed by the Earth

Earth's surface

some heat energy re-radiated back from Earth

Earth warmed: global warming

Figure 2.6 The greenhouse effect and global warming.

Explain what is meant by global warming.

What is the relationship between global warming and greenhouse gases?

Within the last century, there has been an increase in the production of greenhouse gases due to human activities. Increased industrialisation, motor transport, aeroplanes, the burning of garbage, bush fires and deforestation all contribute to carbon dioxide in the atmosphere. This means that more heat energy is trapped within the Earth's atmosphere, resulting in global warming. Global warming can produce these effects: • a rise in sea level, causing loss of coastal land areas and affecting agriculture, fishing and community life • increased temperatures, which favour the growth of some crops but harm others • more drought, affecting water availability for both domestic and agricultural use • more hurricanes, which may have greater strength and cause havoc to crops and livestock • a rise in sea temperature, causing changes to coral reefs, fisheries and other marine organisms • loss of habitats and diversity, with loss of plants and animals due to more stormy weather.

Bio-terrorism bio-terrorism ►

Bio-terrorism is the intentional use of micro-organisms to bring about ill-effects or death to humans, livestock or crops. Agriculture is a perfect target for bio-terrorism because an attack on food supplies affects food stores, restaurants, suppliers and consumers as well as farmers. All countries need to be prepared for the possibility of an attack on crops, livestock or humans.

Diseases useful to bio-terrorists • Smallpox is a viral disease that can be fatal. In 1980, the disease was eradicated due to worldwide vaccination programmes. Some stocks of the virus are kept in high-security laboratories. If smallpox is deliberately released, it could cause a public health catastrophe. • Anthrax is a disease caused by a spore-forming bacterium called Bacillus anthracis. It is caught by humans after contact with infected animals or infected animal products. It is has the potential to be used as a biological warfare agent.

22

2 • Challenges confronting agriculture

• Crop diseases, such as smuts and blights caused by fungi, can be spread easily by fungal spores. If large areas of cereal crops are destroyed, less grain is produced. • Ricin is a toxin made from waste left over from processing castor beans. It is easily made and very toxic. As little as 500 micrograms, about the size of the head of a pin, injected into a human is lethal. Ricin has been used as a bioterrorist weapon and is a serious threat.

I Why

are smuts and blights a hazard?

Bio-terrorism is hard to protect against or to prevent because small quantities of the organisms are easy to hide and can be spread quickly. Sometimes pathogenic organisms can be spread by mistake or by people unaware of the consequences. The rules which govern the import and export of plants and animals are designed I to protect against diseases being transported around the world.

Food security food security ► Food security refers to the availability of food and access to it. As defined by the FAO, 'food security exists when people have physical and economic access to sufficient, safe and nutritious food to meet their needs for an active and healthy life'. The United States Department of Agriculture (USDA) states that food security for a household means access to enough food for an active, healthy life. It includes the availability of nutritionally adequate and safe foods and an ability to acquire these foods in socially acceptable ways (without resorting to emergency food supplies, scavenging or stealing). Worldwide, up to 2 billion people lack food security due to: • poverty • global population growth • climate change • increased production of biofuels on agricultural land • loss of agricultural land to industry and residential areas.

I

I

What does food security mean to a household?

There are direct relationships between agricultural productivity, hunger and poverty. 75% of the world's poor live in rural areas and make their living from agriculture. Hunger and child malnutrition are greater than in urban areas. In rural areas, there is greater dependence on subsistence farming so improvements in agricultural productivity aimed at small-scale farmers will benefit the rural poor first. Increased agricultural productivity enables farmers to grow more food, which leads to better diets. Market conditions that offer a level playing field also lead to higher farm incomes; and raised incomes often result in farmers growing highervalue crops, benefiting themselves and the economy.

Environmental degradation environmental degradation ► Environmental degradation refers to the environment being damaged in any way. Environmental degradation is brought about by: • natural hazards • atmospheric pollution • water pollution • land pollution • global warming • coral reef destruction • deforestation.

23

Section A: The Business of Farming

Natural hazards natural hazards ►

Natural hazards are hazards which are not man-made. They occur at the surface of the Earth, causing loss of life, damage to property and land. They can cause shortterm or long-term changes. The most common natural hazards in the Caribbean are volcanic eruptions, earthquakes, floods and hurricanes. Some of their effects are shown in Table 2.1. Natural hazard Volcanic eruptions

Effect on the environment Eruptions deposit ash on the surrounding countryside and fires caused by burning gas and hot lava destroy vegetation. Deposits of debris are left on land. The most recent eruptions on Montserrat have left much of the island uninhabitable.

Earthquakes

Minor earthquakes are not uncommon in the Eastern Caribbean, and Jamaica lies on an active fault zone. Modern Kingston dates from the destruction of Port Royal in 1907. Submarine earthquakes may trigger tsunamis which flood coastal areas and destroy buildings and infrastructure. Flooding is widespread as storms bring torrential rainfall in a short time. Mountainous islands are most vulnerable; lowlying land floods to several metres as water drains from high ground. Water destroys crops, kills animals and brings about soil erosion. Areas at risk have been identified and early warnings can be given. Apart from tropical storms, flooding can be caused by deforestation, mining and silting up of rivers. Hurricanes cause wind damage, wave damage, storm surges in coastal areas and flooding. Crops and trees are damaged by high winds and storm surges mean that salt water pollutes inland areas. Sea water is poisonous to plants and livestock and soil remains contaminated until the salt is removed by rainwater.

Floods

Hurricanes

Table 2.1

Natural hazards and their effects on the environment.

Atmospheric pollution atmospheric pollution ►

Explain how acid rain is caused and what effects it has.

Pollution occurs when the environment is contaminated by toxic substances. Atmospheric pollution is pollution of the air. It is caused mainly by burning fossil fuels (often for the generation of electricity). Smoke, dust particles and gases (carbon dioxide, sulphur dioxide, nitrous oxides) are released. Sulphur dioxide is poisonous and dissolves in rainwater to form acid rain, which damages crops. An increase in carbon dioxide contributes to global warming. Atmospheric pollution is difficult to control, other than by reducing dependence on fossil fuels and reducing 'carbon footprints'.

Water pollution water pollution ►

What are the consequences of the leakage of sewage into freshwater?

Water pollution describes toxic substances getting into streams, rivers and oceans. Some of these substances come from pollutants in the atmosphere. Others result from sewage, excessive use of fertilisers and pesticide run-off. Organic matter and nutrients in freshwater can cause algae to grow rapidly and crowd out other water plants. When the algae die, they are broken down by bacteria which use up oxygen in the water. The result is that other aquatic organisms die through lack of oxygen. In marine ecosystems, agricultural run-off can upset the food webs. Oil spillage kills sea birds and affects plankton on which marine organisms are dependent.

Land pollution land pollution ►

24

Land pollution can be caused by agricultural activities, urban waste disposal and mineral extraction. Land that is severely polluted cannot grow crops and poisonous substances will affect the biodiversity of habitats. Waste from crops and animals should be composted and recycled for use as fertiliser. Excessive use of fertilisers and pesticides should be discouraged, so that run-off is minimised.

4

2 - Challenges confronting agriculture

Coral reef destruction

r!

Why might global warming contribute to the destruction of coral reefs?

Coral reefs are fragile ecosystems and easily damaged by pollution. Polluted water runs off the land, enters the sea and increases the growth of algae which live on the reef. This kills the coral underneath the algae. Corals can be smothered by sediments washed into the sea from rivers and coastal dredging activities. Over-fishing and tourist activities upset the ecological balance so that the physical structure of the reefs, as well as the plants and animals that live in them, suffer damage. If sea temperatures rise, due to global warming, the coral is weakened and becomes paler in colour. This is called coral bleaching. Weakened coral can be attacked by bacterial and viral diseases. The invasion of coral reefs in the Caribbean by species such as the Indo-Pacific lionfish could also alter the ecosystem.

Deforestation

deforestation ►

r^

Why should deforestation be controlled?

For thousands of years, forests have been cleared to provide agricultural land for crop production and rearing animals. The clearance of trees is known as deforestation. Five hundred years ago, most of the Caribbean was covered in dense tropical forest. There are still many areas covered in natural forest, but rising population means that there is pressure to clear land for crop production, industry and houses. Forests are cleared and wood is used for fuel, but there is no policy for replanting trees. The forested areas that remain are in mountainous regions with high rainfall. These are less accessible to the machinery needed to clear the land for farming. Natural hazards, such as forest fires and tropical storms, also destroy forests. Hurricanes uproot forests and strip leaves, leaving the trees bare. Volcanic activity, producing poisonous gases and hot lava, has affected forests in Montserrat and St Vincent. It is important to retain forests as they: • provide areas for recreation, such as nature reserves and National Parks, with facilities for hiking and other forms of relaxation • control soil erosion by providing cover to break up the force of the rain on the soil • absorb carbon dioxide and provide oxygen through photosynthesis • are an important source of timber for building and furniture. Within protected areas of forest, replanting and maintenance work can be carried out to avoid over-exploitation.

Figure 2.7 Deforestation in the Caribbean.

25

Section A: The Business of Farming

2.3 Terminology used in food safety, i mportation and certification Good Agricultural Practices ( GAPS)

►

The procedures described in this section are used internationally to ensure that food is produced and processed in a safe way. Good Agricultural Practices (GAPS) are applied to crop production and animal husbandry, whereas HACCP and GMPs relate to the manufacture and processing of food.

Good Agricultural Practices (GAPs) As defined by the Food and Agriculture Organisation (FAO) of the United Nations, GAPs are principles applied to crop production and processing, which result in safe and healthy food, taking into account economic, social and environmental sustainability. GAPs can be applied to a wide range of farming systems and rely on four principles: • the economic and efficient production of enough safe and nutritious food • sustaining natural resources • maintaining farming enterprises and jobs • meeting the cultural and social demands of society.

How does the use of heavy machinery destroy the soil structure?

GAPs provide opportunities to decide which farming practices to follow to achieve higher production. Some GAPs relate to soil: • reduction of erosion by hedging and ditching • the correct application of fertilisers • the use of manure, grazing and crop rotation in restoring and maintaining the organic content of the soil • green manuring by growing leguminous crops • protection of soil structure by limiting use of heavy machinery (this compacts the soil). Some GAPs relate to water: • careful use of irrigation • avoiding drainage and fertiliser run-off • planting of suitable crops in areas of low rainfall • maintaining plant cover to avoid water run-off in the wet season. Some GAPs relate to animal production, health and welfare: • respect for animals • avoidance of procedures such as tail docking and de-beaking • reducing use of antibiotics and hormones unless needed for treatment of disease • avoidance of animal waste in any feed given to stock • reducing the transport of live animals, thus cutting down on the risks of epidemics • keeping records so that all animals and their treatments can be traced.

HACCP

26

►

Hazard Analysis Critical Control Point (HACCP) HACCP is a systematic approach to food safety used to identify potential hazards in the food industry. It is used at all stages of food production and preparation, particularly the production of juice, seafood, meat and poultry products. It ensures that food is fit for human consumption by monitoring the stages in its production.

2 • Challenges confronting agriculture

There are seven HACCP principles: 1. Conduct a hazard analysis to identify measures that can be taken to control any biological, chemical or physical hazard that could cause food to be unsafe for human consumption. 2. Identify Critical Control Points (CCPs) in a food manufacturing process at which a hazard can be prevented, removed or reduced. 3. Establish critical limits for each critical control point. A critical limit sets a value at which a hazard must be controlled at each point. 4. Establish critical control point monitoring requirements to ensure that the manufacturing process is under control. • Establish corrective actions to be taken when the monitoring process indicates i ^5. that a critical limit is not being met — this means that products harmful to What do the initials HACCP stand for health do not become available for human consumption. 6. Establish record-keeping procedures so that it can be seen that all steps of the process have been monitored for hazards. 7. Establish procedures for ensuring that the HACCP system is working as it What is a CCP? should and that the products from any manufacturing process are safe. hazard analysis ►

Food processing plants must ensure that their products are safe. They are required to validate their own HACCP plans, which have to be verified to make sure that they are adequate. Verification includes reviewing of plans, inspection of critical control point records and microbial sampling.

Good Manufacturing Practices (GMPs) GMPs ►

Suggest reasons why there are safety problems with refrigerated and dairy foods..

GMPs regulate the manufacture and testing of food products, drugs and medicines. Every aspect of a process is documented so that products can be traced and recalled if unsatisfactory. GMPs are particularly important in the manufacture of pharmaceutical products (medicines). GMPs in the food industry identify and prevent the contamination of raw materials. They also deal with poor design of processing plants and procedures and deficiencies in training employees. Refrigerated foods, meat and dairy foods have a high risk of safety problems as they may become contaminated with pathogens. Another problem is that allergens may be introduced into foods (some people, for example, are allergic to nuts). Food safety experts recommend that training of employees is important in maintaining quality control of materials, adequate cleaning of equipment and documentation of procedures. GMPs, together with HACCP, ensure that manufactured food products are fit for human consumption.

• The major challenge for agriculture is to feed an ever-increasing global population whilst preserving the natural environment. • Agriculture is a very important part of the economy of the Caribbean. • Agricultural productivity is affected by climatic conditions. There is a dry season, when water is short, and a wet season with hurricanes and high winds. • In the dry season, soil water needs to be conserved and used more efficiently. In the wet season, good drainage is important. Pests and diseases of crops are more abundant in the rainy season. • Hilly areas are more difficult to farm because of the lack of infrastructure and problems with the use of heavy machinery and transportation of produce. • Agriculture in the Caribbean needs to be more mechanised to be more efficient. • Investment in rural infrastructural development is the key to agricultural development and food security. • More trained extension officers are needed to spread information on technical developments to farmers.

27

Section A: The Business of Farming

Praedial larceny is a problem, especially for farmers who produce fruit and vegetables which are easily picked and stolen. • Some farmers own land, but many are landless and rent, lease or enter into a share-cropping agreement with landlords. • More stringent government policies are required in the Caribbean to ensure that good agricultural land is not used for housing. • Farming has an impact on the environment and there are concerns about the destruction of ecosystems, loss of biodiversity and pollution. • Plant, soil and animal material brought into the country illegally by travellers may contain pests and diseases which could cause havoc to domestic agriculture. • Natural disasters, such as floods and hurricanes, can damage crops and livestock in the Caribbean. • Previously, women were paid lower wages than men and were not appointed to managerial positions. Nowadays, gender equality is the norm for all occupations. • World agriculture has been revolutionised by globalisation which has opened up world trade and financial markets. • There is worldwide concern that ecosystems are destroyed and biodiversity is lost as a result of clearing land to increase food production. • Global warming resulting from an increase in greenhouse gases can speed up climatic and environmental changes. • All countries need to be aware of the dangers of bio-terrorism in which microorganisms can cause death or disease to crops and livestock. • Increased agricultural efficiency means that farmers can grow more food, leading to better diets and higher•incomes for farmers. • Environmental degradation, resulting from pollution, deforestation and natural disasters, affects agriculture. Measures can be taken to minimise these effects without reducing the efficiency of agriculture. • Good Agricultural Practices (GAPS) are recommendations by the FAO for the production of safe and healthy food whilst sustaining natural resources. • There are strict guidelines for the safe production of processed food, so that the contamination of raw materials and manufactured food products is prevented.

•

Answers to ITQs

can be conserved by using organic matter as a mulch. Seedlings can be transplanted into concave areas so soil water is kept around the roots.

;1 IT02

Establishing wind-breaks to protect crops; staking crops so that they have support; pruning trees so that they have a compact shape.

ITQ3 Farming in mountainous areas is more difficult because the use of heavy

machinery may be restricted, cultivating the land is not easy and the harvesting of the crops can take longer. Farmers may have to use contour terracing. The topsoil is shallower and liable to erosion. ITQ4 Mechanisation of farming is limited because many farms are on hilly

or mountainous terrain so that the use of machinery for cultivation is difficult. In addition, machines are costly and the poorer farmers cannot afford them. ITQ5

The basic facilities required are: roads, a water supply, electricity and telephones, shopping areas, markets, public transport, schools, medical centres.

1T06

Extension officers advise farmers on the latest developments in agriculture and modern technology as it relates to agriculture.

ITQ7 Farmers are not sure that modern ways of doing things will work. The

problem can be overcome by demonstrations of any new techniques at training centres.

28

2•

Challenges confronting agriculture

1108 Praedial larceny is the theft of agricultural produce, such as crops and livestock. ITQ9 The hiring of estate police by farmers' co-operatives; the imposing of more severe fines; regular police checks in rural areas. 11010 Land tenure is the right to hold or own land. 11011 The management of land resources needs to be improved by increasing soil fertility, conserving freshwater resources and maintaining biological diversity. 11012 It is important that pests and diseases are not spread from country to country when food products are imported or exported. Incoming plants and animals are quarantined and the export of food products is controlled. If diseases do spread rapidly then there could be serious consequences to crop production and the raising of livestock. 11013 Gender equality means that all jobs are open to people with suitable qualifications, regardless of whether they are male or female. ITQ14 Women could be discriminated against where heavy manual labour was involved. Also, women might not be considered for managerial positions where they were in charge of a number of male employees. 11015 Globalisation opens up access to world markets for farmers' produce and allows them to learn about new production techniques. 11016 Genetic diversity is the diversity of genes and organisms; species diversity refers to the populations of organisms in an ecosystem; ecosystem diversity is the range of habitats on Earth. 11017 Global warming is the increase in temperature of the Earth's atmosphere due to more heat energy being trapped by carbon dioxide and methane. 11018 Carbon dioxide and methane are called greenhouse gases; as they increase in the atmosphere, due to the burning of fossil fuels and the internal combustion engine, they trap more heat energy. Any increase in these gases will result in a rise in the global temperature. 11019 Smuts and blights are fungal diseases of cereal crops. They are spread by spores and can cause the failure of a whole crop. They are potential weapons of bio-terrorists because a small quantity of the fungus can spread quickly through a crop. The crop can be infected easily without attracting attention. 11020 Food security means that the household has enough nutritionally adequate and safe food in order to lead an active, healthy life. 17421 Acid rain is caused by sulphur dioxide in the atmosphere dissolving in rainwater. It damages crop plants, causes leaves to drop from trees, and gets into freshwater where it makes ponds and lakes more acid — affecting fish and other wildlife. 11022 When sewage leaks into freshwater, it causes algae to grow more rapidly. Their growth deprives other plants of light. When algae die, they are broken down by bacteria. The bacteria use up oxygen in the water and other organisms, such as fish, die. 11023 If sea temperatures rise as a result of global warming, the structure of the coral is weakened. The reef organisms are more susceptible to bacterial and viral diseases. ITQ24 Deforestation needs to be controlled so that there are forest areas for recreational purposes. Also, deforestation causes soil erosion, less oxygen is produced if the trees are removed and there is less biodiversity. IT025 Heavy machinery compacts soil, making it difficult to cultivate; this could contribute to soil erosion if there is heavy rainfall. 29

Section A: The Business of Farming

11026 HACCP stands for Hazard Analysis Critical Control Point. ITQ27 A CCP is a Critical Control Point. It is a stage in a manufacturing process at which a hazard can be removed, reduced or prevented. 11028 Refrigerated and dairy foods may be contaminated with bacteria. For food safety the correct temperature must be maintained. This prevents growth of bacteria.

Examination-style questions

Multiple Choice Questions 1. Mountainous areas in the Caribbean are difficult to farm because: A it is too windy B the terrain is too steep to use tractors C few people live there D there is insufficient rainfall 2. The main greenhouse gases are: A carbon dioxide and oxygen B sulphur dioxide and methane C carbon dioxide and methane D methane and sulphur dioxide 3. Global warming may cause: A a fall in sea level B a rise in sea temperature C fewer hurricanes D a longer wet season 4. Species diversity is: A the range of habitats B the diversity of genes C the diversity of organisms D the populations of organisms in an ecosystem 5. Which of the following is NOT a cause of environmental degradation? A forest fires B overfishing C land fragmentation D atmospheric pollution

Short answer and essay-type questions 6. (a) Explain the meaning of land tenure. (b) Describe how it can affect local and regional agriculture. 7. (a) Describe the importance of mechanisation in agriculture. (b) Why is mechanisation limited in scope and usage in most Caribbean countries? 8. (a) What is praedial larceny? (b) How does it affect Caribbean farmers? (c) Suggest THREE ways in which the problem can be solved. 9. (a) List FOUR environmental issues that affect the Caribbean region. (b) Discuss how each of the issues you have listed affect fanning in the region. 10. (a) Define 'globalisation' as applied to farming. (b) Show how progressive farmers in the Caribbean can benefit from globalisation. 11.Discuss the problems which face farmers who cultivate crops on hilly or mountainous terrain. 12. Consider the effects of global warming and how farming in the Caribbean could be affected.

..........

AlIEIld1111ES to C0111111110[1d1 idfirl q

By the end of this chapter you should be able to:

3 explain what is meant by 'non-conventional' farming systems 3 describe organic farming and hydroponics 3 discuss urban and pen-urban farming ,/ explain the principles of organic farming 3 state how organic farms are certificated.

Concept map Non-conventional farming systems

Organic arming

Other systems

I mportance

Trough culture

Certification —

Hydroponics

-

Grow box

Principles

Management

Soil

Weeds

Urban and periurban farming

Nutrient film technique

Pests ..-

31

Section A: The Business of Farming

3.1 Non-conventional farming systems Modern farming methods conventional farming ►

monoculture ►

Explain what is meant by monoculture.

1r

Why are traditional methods of agriculture more sustainable than monoculture?

By conventional farming methods we mean modem farming methods, which are designed to produce large quantities of food to be sold for profit. Farming is now a large-scale industry and relies on the use of machinery and chemicals. Few people are required to operate the machinery, which prepares the land, sows the seeds and harvests the crops. This trend in farming has occurred in response to increasing populations and the demand for cheaper food. Monoculture, where large areas of land are planted with the same crop year after year, is a feature of modem farming. It often leads to greater farm profits as a much greater quantity of a crop can be grown. However, monoculture also leads to loss of natural ecosystems and habitats. Modem farming relies on artificial fertilisers to improve soil fertility and increase crop yields. Diseases are prevented by pesticides, weeds are destroyed by herbicides and chemicals are fed to animals to promote growth. However, there is now concern that modem agricultural practices damage the environment and soil structure, reduce biodiversity and introduce health hazards to both humans and animals.

Figure 3.1 An example of monoculture: growing tobacco.

Traditional farming methods In contrast to modern fanning, traditional methods of agriculture cause less damage to the environment. An example of traditional fanning is small-scale mixed farming ► mixed farming, where there is recycling of waste materials. The waste from animals is used as manure, so nutrients are returned to the soil via the carbon and nitrogen cycles (see pages 103-106). By growing a wide range of crops and using crop rotation, both soil structure and fertility can be maintained. Traditional farming methods are more sustainable than modem methods.

32

3 • Alternatives to conventional farming

Non-conventional farming systems non-conventional farming systems ►

Non-conventional farming systems have developed in response to concerns about the effects of intensive systems on the environment and the quality of food produced. Most non-conventional systems are labour-intensive (they employ more people than conventional systems). Also, yields are lower than in conventional systems. However, the food produced by non-conventional farming is likely to be of better quality and so command a higher market price.

Organic farming organic farming ►

Organic farming is a form of non-conventional agriculture that excludes, or strictly limits, the use of artificial fertilisers, herbicides and pesticides, plant growth regulators and animal feed additives. Biological pest control is used instead to get rid of pests. Compost, green manure and crop rotation are used to maintain soil fertility. Techniques may vary from country to country, but the principles and practices were set out in a document produced by the International Federation of Organic Agricultural Movements (IFOAM). In 2005, this organisation created the Principles of Organic Agriculture as guidelines for the certification of organic farms.

Principles of organic farming The list below shows what organic farmers are aiming to achieve. • Produce good food that has a high nutritional value. • Maintain and improve soil fertility. • Use renewable resources wherever possible. • Protect wildlife habitats. • Avoid pollution from agricultural techniques. • Encourage a diversity of wildlife on the farm. • Raise livestock in conditions which allow them to carry out innate (natural) behaviour.

Practical activity: Visit a local organic farm. Find out how the organic farm differs from a conventional farm in terms of crops and livestock, use of fertilisers and pesticides, and feed given to livestock.

Organic farmers need to develop a fertile soil on which they grow a mixture of crops. They cannot use artificial fertilisers and use of pesticides is restricted. They rear animals in a humane way, without routine use of the hormones and antibiotics that are common in intensive livestock production. They are not allowed to grow genetically modified crops.

List the main principles of organic farming.

Hydroponics hydroponics ►

nutrient film technique (NFT)

►

Hydroponics (from the Greek words hydros [water] and ponos [labour]) is the practice of growing plants in a nutrient solution without soil. This is another form of non-conventional farming. Instead of soil, the plants may be rooted in peat, sand or rock wool. Soil is not essential for the growth of terrestrial plants (plants that grow on land), as roots can absorb all the mineral ions needed for growth from a nutrient solution. Hydroponics can supply fruit and vegetables in areas where the soil is lacking or of poor quality. The commercial use of hydroponics was demonstrated on Wake Island in the Pacific. In the 1930s, this rocky atoll was a refuelling stop for an airline. As there was no soil, vegetables for the passengers were grown in nutrient solutions. Space research programmes have also looked into growing plants on other planets or during long flights.

The nutrient film technique In the 1960s, the nutrient film technique (NFT) was developed. A circulating system supplies plant roots with oxygen and nutrients. This technique is widely used for growing tomatoes, cucumbers and salad vegetables in glasshouses.

33

Section A: The Business of Farming

The plants are grown in troughs, with roots embedded in rock wool or some other inert material. They are supplied with a nutrient solution containing the balance of minerals essential for healthy growth. The solution is pumped into the troughs, circulates around the roots, collects in a tank and is then re-circulated.

Figure 3.2 The nutrient film technique.

O

Concentration of the nutrient solution can be varied at different stages of growth as required. The solution is aerated so that roots obtain oxygen. As plants grout, they are supported by wires suspended from the roof of the glasshouse.

What do the initials NFT stand for? 0

Name THREE crops that can be grown using hydroponics. =

3

Practical activity: If possible, visit a farm where hydroponics is used to grow a crop.

grow box ►

Practical activity: Explain how you would grow a salad crop using a grow box or a trough. Include as much detail about the conditions needed as possible.

Describe the advantages of grow boxes and trough culture,

34

The advantages of the nutrient film technique are: • high yields as plants get all the nutrients they require • soil-borne diseases are eliminated • produce is clean and not covered in soil • harvesting the produce is easier and more efficient. The nutrient film technique is usually carried out in glasshouses, where temperature and light can be controlled. Costs of installing and running this are high, but producing fruit and vegetables in large quantities and of good quality out of season can make this technique profitable. Grow boxes A grow box is an enclosed box used to grow plants in a self-contained environment. The box has a hydroponics system, a built-in light and a means of ventilation. Some have air-conditioning to maintain the correct temperature and to enrich the atmosphere with carbon dioxide to boost growth (carbon dioxide makes plants grow faster). Grow boxes are used by people who have no garden and for growing plants out of season. They are easy to use and allow the gardener to control the environment of the plant to achieve the best growth. They are also used for growing plants in controlled conditions in laboratories. Simplified grow boxes, suitable for patios and decking, have been devised. These incorporate a watering system and deliver measured quantities of fertiliser, but they are designed for use outdoors and do not include a lighting system or temperature control. In the Caribbean, grow boxes of varying sizes are constructed using local and discarded materials such as bamboo, wood, galvanised sheets and bricks. The growing medium may be a mixture of topsoil and pen manure, sharp sand and rotted bagasse (or plastering sand and rotted sawdust).

3 • Alternatives to conventional farming

Trough culture trough culture ► Trough culture involves growing crops in shallow troughs, 15-20 cm deep and 60-70 cm wide. Troughs can be filled with an inert, soil-less medium, such as rock wool, and are connected to a drip system which supplies water and nutrients in solution. Once the troughs have been set up, they are easy and inexpensive to maintain. They can be used for vegetables and flowers; the gardener can put them in greenhouses or anywhere convenient. Both grow boxes and trough culture enable plants to be grown where space is limited or soil is poor. Modifications can be made to suit circumstances, e.g. the number of units and their arrangement; the use of different types of inert material; whether temperature and lighting need to be controlled. Commercial systems have many units, but both methods can be used on a smaller scale. Figure 3.3

Trough culture. market gardens ►

Explain why it is more profitable for a small farmer to sell his produce directly to the consumer (rather than selling it to a wholesaler).

Urban and peri-urban farming Urban and peri-urban farming is the cultivation of small areas of land, usually less than 2 hectares, in or near cities, towns and villages. The small farms, or market gardens as they are sometimes called, produce fresh vegetables, fruit and meat for urban consumers. These benefit the community by increasing the quantity and quality of the food available. They contribute to food safety and food security. Market gardens are intensively cultivated and most crops grown are shortterm, growing and ripening within 3 months. Crops include tomatoes, lettuces, cucumbers, cabbages, pak-choi, celery, sweet peppers and spinach. Sometimes four short-term crops are grown in a year, so fertilisers are used to maintain soil fertility. If the small farm is mixed, with some animals being kept, then farmyard manure is used together with artificial fertilisers. This type of farming includes the use of pots, troughs, grow boxes, discarded tyres, hydroponics and sheds covered with polythene. Produce is harvested by the farmer, often with the help of his family, who also get it ready for market. Vegetables are cleaned, graded and made to look presentable to the consumer. If the farm is very small, the farmer will sell from a roadside stall. If the farm is bigger, the farmer will sell to a wholesaler, who buys the whole crop and transports it to a market where it is sold to retailers. Each time produce is sold, e.g. from farmer to wholesaler and from wholesaler to retailer, the price increases. Urban farms are important to the economy of the Caribbean region. Several Caribbean governments have set up marketing boards to purchase crops from urban farmers and retail them to the public. The benefits of urban farms include: • a reduction in transport costs as food is grown locally • fewer pesticides, which make food production more sustainable • no food preservatives as food does not have to travel long distances • employment for local people.

3.2 The principles of organic farming In organic farming, the use of herbicides and pesticides is limited resulting in an increase in biodiversity. Organic farming benefits the environment in many ways. Weed species growing in an organic crop attract insects which feed on plant pests. In turn, these insects will provide food for birds and mammals. The use of farmyard manure to add organic matter to the soil encourages soil micro-organisms, which contribute to soil fertility by breaking down plant and animal remains. Overall, there are 30% more species found on organic farms than on conventional farms. Organically grown produce is usually higher priced than other produce — but health concious people will often pay these prices.

35

Section A: The Business of Farming

Soil management on organic farms soil management ► An organic farmer uses soil management to ensure a supply of the essential nutrients (nitrogen, potassium and phosphorus). Instead of relying on artificial fertilisers, the farmer can use some of the methods summarised in Table 3.1. Method Crop rotation ►

Green manuring ►

Intereropping ►

Organic manure and composts such as crop residues (sugar cane waste, spent mushroom compost)

Description • a sequence of different crops is grown from year to year (cereals, root crops, legumes) • the sequence is planned so that crops are grown on different plots each year (see Figure 3.4) • the ploughing in of a cover crop, such as a legume • the ploughing in of a crop residue, such as stubble • the crop is left on the surface of the soil and the next crop is then planted through it by direct drilling • two or more crops are grown at the same time on the same land (see Figure 3.5) • crops may mature and be harvested at different times

• can be spread on the soil, ploughed in or used as a mulch • animal manure must be composted before use on the soil to kill pathogenic organisms

Benefits to soil • life cycles of pests and pathogens are broken (different types of crops attract different types of pests and pathogens) • inclusion of a legume increases soil nitrogen • different crops need different methods of cultivation so this improves soil texture • adds organic matter to the soil • improves soil fertility by increasing soil nitrogen • provides cover to prevent run-off during the wet season

• a second crop can reduce competition from weeds • if a legume is included then nitrogen fixation is encouraged • the cover of vegetation reduces run-off in the wet season • saves on space if more than one crop is grown on the same piece of land • introduces organic matter which binds soil particles together • helps aeration and drainage in clay soils • helps retain water in sandy soils • releases nutrients slowly over a long time (artificial fertilisers release nutrients quickly) • provides food for soil animals such as earthworms

Table 3.1 Methods of managing soil fertility on organic farms.

Why is crop rotation good for soil fertility?

How does intercropping benefit the small farmer?

Area I

Area 2

Area 3

Area 4

Leaves

Fruits

Roots

Legumes

Legumes

Leaves

Fruits

Roots

Roots

Legumes

Leaves

Fruits

Fruits

Roots

Legumes

Leaves

Year I

Year 2

Year 3 Year

Figure 3.4 A four-year crop rotation.

36

Figure 3.5 Intereropping: ackees and pasture.

3 Alternatives to conventional farming

Weed control on organic farms weed control ►

List FOUR ways of controlling weeds without using a weedkiller (herbicide).

Weed control on organic farms poses problems as herbicides are not encouraged. Methods include hand-weeding, hoeing, mulching with compost and the use of plastic films spread across the ground. In rice-growing areas, ducks and fish have been introduced to paddy fields to eat weeds and insects.

Pest control on organic farms

The control of insects and other pests is difficult to achieve without chemicals. Pests cause serious losses and few organic farmers manage to eliminate the use of chemical pesticides entirely. Organic insecticides include Bt (a bacterial toxin produced by Bacillus thuringiensis), Pyrethrum and Rotenone. Although these are permitted, they are often combined with biological pest control and cultural integrated pest management methods in a technique called integrated pest management (IPM). IPM involves ( IP M) ► pest control using an array of complementary approaches including natural predators, pesticides, and other biological and environmental control practices. In this way, the use of chemicals is reduced and damage to the environment and harmful residues in food are minimised. biological pest control ► Biological pest control involves the introduction of another species to control the pest. The introduced species will reduce the population of the pest, but will not get rid of it completely. The introduced species may be: • a natural predator of the pest organism, such as a mite • a parasitoid, such as a wasp that lays its eggs in another insect • a parasite, such as a nematode worm that lives in slugs • a pathogenic (disease-causing) organism, such as a bacterium.

What are the drawbacks of biological pest control?

Before any biological control method is used, it has to be tested to make sure that no unwanted diseases are introduced, that it only affects the pest organism, and that the control organism can be bred in sufficient numbers to be effective. Biological control is most successful in glasshouse crops, such as tomatoes and cucumbers. The control organisms are introduced into the glasshouse (an enclosed area), and numbers of pest and predator can be carefully monitored. If the life cycle of an insect pest is interrupted, its numbers will fall. Insects mate once and the female stores the sperm. If the sperm are infertile, fewer offspring will be produced. It is possible to sterilise male insects using ionising radiation (X-rays) and then allow them to mate with normal females. The sperm will be defective and the eggs laid by the females do not develop. This method has been effective in the control of screw-worms which harmed the cattle industry in the USA. Alternative control methods involve the use of chemicals and hormones to lure insects to positions where they can be killed by other methods. Hormones from female insects attract the males. If traps are baited with these hormones, the males can be caught and destroyed. If there are no males for the females to mate with, no eggs will be laid and the pests will be reduced.

Practical activities: 1. List insects useful to farmers and crop growers. Collect pictures of these insects and, for each one, write a short comment on its life cycle and the way in which it benefits agriculture. 2. Choose a suitable piece of ground or a container, such as a trough or a large pot, and fill it with soil or compost. Plant herb seedlings and grow them without using any chemical fertilisers or pesticides. Make notes about what happens.

37

Section A: The Business of Farming

Certification of organic farms Farmers who sell their produce as 'organic' must obtain certification. There are some basic steps to the certification procedure: • the farmer finds a suitable agency that will carry out the procedure • the farmer makes an application (it is usually necessary to pay a fee at this stage) • the farm has to be inspected by the agency • the farmer will be notified whether or not the application is successful. The application form requires details of: • soil fertility planning • seeds and seed planting • weed and pest management practices • storage and handling of produce • details of the crops grown and the fields used (a map of the farm has to be supplied) • plans for monitoring how the farm will be managed to avoid contamination with non-organic products.

List FOUR things that an inspector would check

on a visit to certify an organic farm,

When the farm is inspected, the fields, implements and buildings are reviewed. The farmer provides the inspector with records of crops planted, sources of seeds used, details of harvesting and storage, how the produce is transported to market, and the sales records. Before a certificate can be granted, land has to be free from prohibited pesticides and fertilisers for 3 years. If livestock are involved, the conditions in which they are kept, their feed and medication have to be inspected. The inspectors have to be convinced that the producer uses techniques that conserve and build soil resources, produce little pollution and support natural pest management. In addition, the inspectors make sure that there is no contamination from pesticides and fertilisers used on neighbouring farms. Becoming 'organic' can be expensive and time-consuming for a small farmer. There is usually a fee to be paid for inspection and certification, and much recordkeeping and paper-work. However, the principles of organic farming encourage the maintenance of ecological balance and biodiversity. Many consumers are prepared to pay more for organically produced food.

Summary • Conventional farming is designed to produce large quantities of food cheaply. It is' mechanised to minimise labour costs. Artificial fertilisers and pesticides maintain soil fertility and control pests. Large areas of land are cultivated and sown with one crop (monoculture). The environment is affected, reducing biodiversity. • Organic farming limits the use of artificial fertilisers, herbicides and pesticides. The environment is protected and there is an increase in biodiversity. Soil fertility is maintained by using compost, green manuring and rotation of crops. Pest control is achieved by means of biological controls. • Hydroponics is a system of growing crops without soil. The crops are provided with the nutrients they need in solution. Crops grown in this way are easy to grow, harvest and clean. • Grow boxes and trough culture can be used where space is limited. • Urban and peni-urban farming make use of land in and around towns and cities. Crops can be marketed in towns and cities and form an important resource.

38

3 • Alternatives to conventional farming

•

•

Answers to ITQs

The principles of organic farming are to maintain ecological balance and biodiversity, manage soil fertility and control pests and weeds without the use of harmful chemicals. To qualify for organic status, a farm must be inspected and certified.

ITCH

Monoculture involves the cultivation of large areas of land which are then planted with one crop. It gets rid of small fields and means that machinery can be used for cultivation, saving on the cost of labour.

11112

Traditional methods of agriculture, such as small-scale mixed farming, mean that animal waste can be recycled and used on the fields. Nutrients are returned to the soil by means of the carbon and nitrogen cycles. Soil structure and soil fertility are maintained.

ITQ3 To produce good food with a high nutritional value; to maintain and

improve soil fertility; to use renewable resources; to protect plant and wildlife habitats; to avoid pollution; to raise livestock in a humane way. ITQ4 NFT stands for nutrient film technique. 11115

Tomatoes, lettuce, cucumbers.

IT06

Grow boxes and trough culture enable crops to be grown where space is limited. Grow boxes fitted with lights can be used to grow plants indoors or in laboratories. They are useful if the soil is of poor quality. Crops can also be grown out of season.

ITQ7 The small farmer would not get as much for his crops if he sold them

to a wholesaler. He would have to pay for their transport and then the wholesaler would need to make a profit as well. The small farmer will make more money by selling the crops from a roadside stall run by a member of his family. ITQ8

Crop rotation improves soil texture, it breaks the life cycles of pests and diseases and it increases the nitrogen content of the soil if a legume is included.

11119

Two or more crops can be grown at the same time, which saves space; crops can be harvested at different times; it increases the ground cover and prevents run-off; reduces competition from weeds.

111110 Hand-weeding; hoeing; mulching with compost; the use of plastic films. IT1111 Not all pests will have a natural predator; the predator has to be bred and

released in sufficient numbers to be effective; the method must be tested thoroughly to make sure there are no diseases introduced; it is difficult to control unless it is introduced into an enclosed area. ITC112 Sources of seeds; details of how crop is stored; use of compost; how crop

is harvested; how crops are transported; care of animals; records of how animals are fed and treated.

39

Section A: The Business of Farming

Examination-style questions

Multiple Choice Questions 1. Which of the following is NOT a principle of organic farming? A use of compost B biological pest control C monoculture D protection of wildlife habitats 2. Crop rotation means: A growing the same crop year after year B growing crops in a different sequence each year C planting two crops together at the same time D sowing a cover crop after the main crop has been harvested 3. A species of mite is used in biological pest control because: A it lays its eggs in a pest insect B it causes a disease in the pest C it is a parasite of the pest D it feeds on the pest 4. In one form of pest control, male insects are sterilised to: A make their sperm infertile B make them unattractive to the females C attract the females to them D kill their sperm

Short answer and essay-type questions 5. (a) Explain why conventional farming has developed into a large-scale industry. (b) Describe how non-conventional farming methods differ from conventional ones. 6. (a) What are the benefits of growing crops using the nutrient film technique? (b) Why do temperature and light need to be controlled in such systems? 7. (a) What is a pen-urban farm? (b) Why is it beneficial to the community? 8. Describe the ways in which soil management can maintain soil fertility on an organic farm. 9. Describe the procedure by which a farm can become certified as an organic farm.

40

.................

uuw

EC011011iC factors of

VodEt1011 By the end of this chapter you should be able to:

explain the economic functions of production, consumption and marketing list the factors that affect production describe how the factors of production are related to agriculture state what is meant by the law of diminishing returns 3 show how demand and supply is related to pricing.

3

Concept map

Factors of production

Agricultu al production

Consumption tenure

Land

Supply and demand

suitability

family labour Pricing

Labour hired

commercial banks

Law of diminishing returns

Source agricultural banks total product co-operatives Capital

average product credit unions marginal product fixed capital Types

marginal cost working capital

Management

41

Cen•i--

A. TL_

Section A: The Business of Farming

4.1 The economic functions of production, consumption and marketing

mixed farm ►

agricultural enterprise ►

i Name the THREE major economic functions in any country.

Farming is a business and a farm can be defined as an economic unit engaged in marketing (driver) the production and sale of agricultural produce for maximum profit. A farm may produce crops or livestock. Sometimes farms produce both crops and livestock the economy: (a mixed farm). vehicle of change and development Farms often consist of different sections, each focused on the production of one production consumption type of crop or livestock. Each section (engine) (fuel) of a farm is known as an agricultural enterprise. The farmer manages each enterprise by deciding how much to produce and how to allocate resources to obtain high yields and maximum profit. Figure 4.1 Economic functions. To do this, knowledge of the production process is necessary. The farmer also must understand the likely demand for the commodity and the way in which it is marketed. In any country, the economy is the vehicle of change and development. There are three major parts of this vehicle: production, consumption and marketing. Each part carries out specific functions. Production plays the role of the engine of the economy, marketing has the role of the driver, and consumption provides the fuel (see Figure 4.1).

Production production ► Production is a planned economic activity incorporating several inputs; it focuses on the manufacture of goods and the provision of a number of services. The aim of production is to satisfy people's wants (see Figure 4.2). As the volume of production increases, wealth is created and this promotes economic welfare of the population. Their standard of living is improved as more of their wants are satisfied. PRODUCTION • a process • an economic activity Consists of: • primary production • secondary production

FOCUS

SERVICES

I COMMODITIES/GOODS

• commercial, e.g. agri-chemicals • technical, e.g. extension officer • professional, e.g. veterinarian

• capital goods, e.g. farm tractor • consumable goods, e.g. foodstuffs • luxury goods, e.g. big screen TV

AIMS/OBJECTIVES

• to satisfy people's wants • to promote the economic welfare of people • to improve people's standard of living • to create individual and national wealth

Figure 4.2 The concept of production.

42

4 Economic factors of production

Types of production primary production ► primary products ► secondary production ► secondary products ►

There are two types of production: primary and secondary. Primary production refers to goods or raw materials which are produced initially, for example pineapple or sugar cane. Some of these goods may be consumed as primary products. Alternatively, primary products may undergo secondary production, which involves processing the raw products into secondary products. For example, pineapple may be processed into jam and juice, or sugar cane can be processed to make sugar, molasses, bagasse and rum.

Goods capital goods ►

luxury goods ► consumable goods ►

Different kinds of goods are derived from production. Capital goods are items such as a farm tractor and a dairy herd — these are used in several production cycles. There is always a quantity of goods existing on a farm and this is called the capital. Luxury goods, such as a swimming pool and a big screen television set, provide enjoyment and act as status symbols. Consumable goods, such as foodstuffs, are goods which are essential for human nutrition.

Services Services can be grouped into: What are the objectives of production?

Giving appropriate examples, explain the difference between primary production and secondary production.

• commercial services, such as those provided by agri-supply stores and livestock depots • technical services, such as those provided by extension officers and agriteachers • professional services, such as those provided by agricultural consultants and veterinarians.

Consumption consumption ► consumers ►

Consumption is an economic, consumer-centred activity. It involves the purchase and use of goods and services by clients and customers (known as consumers). Consumption normally comes after production and marketing, and is the fuel which keeps the economic engine of production running (see Figure 4.3). • • •

income level of consumers satisfaction of consumer needs product substitutes (are there other products that could be used instead?)

FACTORS INFLUENCING CONSUMPTION DECISION-MAKING

• • •

• an economic consumer-centred

1-■

• •

customers clients

CONSUMERS

•

end users of the product

religious reasons health concerns aesthetic features (what the product looks like)

activity and process

• an activity that fuels the engine of

1-■

production

CONSUMPTION: WHAT IS IT?

• the purchase and utilisation of goods and services

• the end product of production and marketing

Figure 4.3 The concept of consumption. Consumption patterns vary. Some factors which contribute to decision-making by consumers are: • Income level Consumers want to obtain goods and services at the lowest cost. They purchase and use those goods and services which they can afford. People on low incomes are limited in terms of the quantity and the form of product which they can purchase. • Satisfaction of needs Consumers choose goods and services which satisfy their tastes and convenience. With respect to food, consumers buy products which are easy to prepare and use, and which meet their survival, nutritional and health needs.

43

Section A: The Business of Farming

Explain the meaning of consumption.

t

^

State FOUR factors which contribute to consumption decision-making by consumers,

• Religious reasons Some consumers do not buy ce rt ain foods, such as pork and beef, due to religious beliefs. Others buy only 'halal' meat from reputable meat shops. ' Halal' involves the reciting of a special prayer by Muslims as the animal is being slaughtered. • Health concerns More consumers are becoming health-conscious and avoid buying foods which contain high amounts of cholesterol and saturated fats. • Aesthetic features Product features (design, presentation, colour, taste and general appearance) appeal to consumers, increasing consumption of those products. • Product substitutes Knowledge of product substitutes and their availability might enable some consumers to make compromises and choose alternative goods and services.

Marketing marketing ► Marketing is the link between production and consumption. It incorporates several business activities in a co-ordinated way to promote the flow of goods and se rv ices from the point of production until they finally reach the consumer. The process is streamlined to get the ri ght product to a particular consumer at the ri ght place and time. This is achieved by the co-operative effort of each business operator in the marketing channel. Middlemen operate between the producers and consumers. They are agents, middlemen ► brokers, wholesalers (merchants), processors and retailers (vendors). The merchant wholesalers purchase and collect products together at a focal point for dist ri bution to processors and retailers. Often this is accomplished through the services of commission agents and brokers, who are also acting as salespersons. Huge sums of money are spent in advertising and product promotion to persuade consumers to purchase and use new products. Marketing functions (see Table 4.1) vary in complexity, depending on the nature of the products, quantity produced and the characte ri stics of the market. Main function

Includes

Activities involved

Merchandising

• buying • pricing • selling

The focus is on trading, product promotion, transfer of title and the ownership of goods.

Handling

• • • •

transportation grading assembling storage

Attention is paid to the physical activities which enable processing and easy distribution to retailers and consumers.

Processing

• • •

manufacturing packaging labelling

These activities change the form of the product, add value and increase the shelf-life. In addition, they seek to satisfy consumers' tastes and preferences.

Supporting

• standardisation • financing • risk-bearing (insurance) • market intelligence

r, Name the FOUR main groups of marketing functions and explain why each is involved in the marketing process.

These activities are regarded as 'facilitating functions', which means that they enable all the other functions to be carried out smoothly.

Explain the role of middlemen in the marketing process.

Table 4.1 Marketing functions.

4.2 The factors of production Capital is needed to finance any manufacturing process, labour to carry out the tasks, and some management structure is necessary to co-ordinate the activities.

44

4 Economic factors of production

factors of production ►

The essential resource is the one from which the product is derived. In the case of agricultural production, land is an essential resource (see Figure 4.4). Agricultural production varies with the amount, quality and effective use of these essential resources: land, labour, capital and management. These resources are known as the factors of production.

4.3 The factors of production related to agriculture land.)

FACTORS OF PRODUCTION

Land

manageme nt

Figure 4.4 The factors of production.

sharecropping ►

The Caribbean region is dominated by small island states with little flat or undulating land and there are numerous smallholdings on hilly terrain. Only Guyana and Belize have large expanses of flat land suitable for large-scale agricultural development. Unfortunately, those areas are currently under-used. Despite land reclamation initiatives in some Caribbean countries, land as a factor of production is a limited resource which cannot be created. Farmers may work on land which is rented or leased. Many do not own land and enter into sharecropping arrangements with their landlords. Sharecropping is a system of agriculture or agricultural production in which a landowner allows a tenant to use the land in return for a share of the crop produced on the land. Often sharecropping farmers may farm two or more scattered holdings. Land tenure systems were described in Chapter 2. The suitability of the land for agricultural production depends on both climate and topography. The climate, with its seasonal variations in rainfall and temperature, affects the types of crops that can be grown; whereas the topography affects the ease of cultivation and equipment that can be used (see Chapter 2).

Loss of agricultural land rros List FOUR characteristic features of land as an agricultural resource in the Caribbean.

Describe TWO major causes of the loss of prime agricultural land both locally and regionally.

Land often appreciates (rises) in value over time and can make large profits for residential developers who sell the land for housing. Governments also acquire land in prime agricultural areas for housing schemes. Over-cultivation and a loss of soil fertility also mean that less agricultural land is available. If agricultural productivity is to be maintained or increased, land needs to be managed and used effectively. Therefore farmers should adopt suitable soil management techniques, cultural practices and take advantage of improved technology. In this way, soil fertility and agricultural land can be maintained.

Labour labour ► Labour is the total sum of money (the cost) and the total number of man-hours

family labour ►

required for the production of commodities. In the Caribbean, labour has been a challenging factor of production in commercial farming, both locally and regionally. Slavery and indentureship, instituted by the former plantocracy, have resulted in a negative attitude towards agriculture labour. III-treatment of the slaves resulted in their descendants pursuing other careers rather than working on the land. Farmers with smallholdings largely rely on self-labour and family labour (the work is done by the family). The cost of such labour is not considered as a part of the general cost of production, as no money is actually paid out for the work done.

Casual labour casual labour ►

Farmers who operate medium-scale and large-scale farms use hired labour on a permanent basis and casual labour (temporary paid labour) for specific farm operations. Casual labour may be: • seasonal labour at peak periods for planting, harvesting, fertiliser applications or pest and disease control

45

Section A: The Business of Farming

• task labour for specified hours of work and operations such as procuring forage and milking cows • contract labour for infrastructural works, such as the construction of livestock pens and land preparation.

r

i

From an economic standpoint, how is labour normally measured?

What effect does self-labour and family labour have on the farm profits of small farmers?

1

In Trinidad and Tobago, the minimum wage policy of the government has increased the income of farm workers, but has not resulted in attracting workers into the private agricultural sector. People would rather work for the government unemployment relief programmes where hours of work and tasks are less demanding. The wages and conditions are also better. The intervention of local and regional governments, as well as the International Labour Organisation (ILO), is required to: • develop a system of wages based on specialised agricultural skills which would attract workers to the agricultural sector • institute measures to foster better labour relations • promote the welfare of farm workers and their families, especially in the private agricultural sector.

Capital capital ► Capital refers to all buildings, machinery, equipment, tools, materials, tree crops and livestock which are used to produce agricultural goods and services on a continuing basis. Each resource has a productive lifespan and a monetary value that decreases depreciation ► with time due to depreciation. Depreciation is a decrease in value due to age or wear. Farmers need to ensure that regular maintenance is carried out to keep each resource in a serviceable condition. Collectively, capital resources and land are assets ► referred to as assets and are expressed in monetary terms as wealth.

Loans If a farmer needs to finance an agricultural enterprise and has no money from family resources, he may seek a low interest loan. The farmer may have to offer capital resources, or assets, as collateral to the lending institution. In this way, capital enables the farmer to become self-reliant. It is easier for farmers with large farms to borrow money than it is for farmers with small farms. The larger the farm, the greater the assets; this means that profits will be greater and the farmer can repay the loan more quickly. Loans can be obtained from: • commercial banks • agricultural banks • co-operatives • credit unions. commercial banks ► Some commercial banks have agricultural advisers who understand the problems of farming and can give advice. Usually, these banks only make loans to big farms. Commercial banks do not like lending to small farmers, particularly as their profits can be badly affected by a bad harvest, hurricanes and other disasters. The small farmer is not a good risk and may not be able to repay the loan promptly. The Caribbean Development Bank (CDB) is committed to financing projects in the region and has departments that loan money to farmers. It prefers long-term loans and is prepared to allow a longer repayment time. co-operatives ► In the case of co-operatives (see page 72), several farmers working together can apply for a loan. A bank is likely to look more favourably at such applications. credit union ► A credit union is a co-operative financial institution that is owned and controlled by its members. It is different from a conventional bank in that members who have accounts in the credit union collectively own the credit union. It offers facilities for. savings accounts, as well as for borrowing money at reasonable rates of interest.

46

4 - Economic factors of production

The Caribbean Confederation of Credit Unions is an organisation that fosters co-operation and mutual self-help. Funds help a variety of projects including rural development. There is provision for funding small businesses and small farmers. Jamaica, for example, has 56 credit unions with assets of millions of dollars.

Fixed and working capital fixed capital ►

working capital ►

Describe FOUR different forms of capital resources which are essential to a farmer.

Fixed capital is the amount of capital permanently invested in a business. It refers to assets that are not used up in the production of a product. It is the capital that is invested in land, buildings, vehicles and equipment. Working capital refers to the assets of a business that are used to convert raw materials into a product. For a farmer, the working capital consists of labour costs, cost of seed or stock, means of getting the product to market, and the cash received for goods. The farmer keeps accounts of expenditure on labour, seeds and hire of equipment and the receipts for the produce that is sold. He can then see whether or not there is a profit, which can be invested to improve the enterprise.

Management

What is meant by depreciation?

What is the objective or focus of farm management?

111115 List FIVE managerial functions on a farm.

Management focuses on the effective use of resources by the farmer. These resources include land, labour, materials, finances and time. The farmer needs to achieve maximum production at minimum cost. If used wisely, management can sustain agricultural output and quality. On small-sized and medium-sized holdings, most farmers act as their own farm managers. They carry out the functions of planning, organising and directing the workers and supervising farm operations. On large farms, farm managers are employed to carry out these tasks. A farm manager may be responsible for running a single enterprise or have overall responsibility for day-to-day operations on the farm. Management involves situational analysis, decision-making and the acceptance of full responsibility for the outcomes, whether they are positive or negative. It requires people who have gained technical knowledge of the scientific principles of agriculture, and who can combine practical farming skills with business experience. A good farm manager has a grasp of the factors of production and uses resources effectively to make a profit.

4.4 The 'law of diminishing returns'

marginal return ►

The 'law of diminishing returns' states that if inputs are fixed and increasing amounts of just one variable input are added, then the marginal output per unit of the variable input will increase up to a certain point and then decline. Another name for marginal output is marginal return. To understand how this law works, we need to understand the terms used.

Input input ►

fixed inputs ►

Input is something that is 'put into' a production system for a particular purpose and which contributes to the end result. Inputs include energy, information, data programmes and supplies. In a farming enterprise, inputs consist of: • land • labour • machinery • fuel • farm buildings • planting materials • fertilisers and pesticides. In agricultural production, inputs such as land, machinery, equipment and farm buildings do not change and are referred to as fixed inputs. The quantities of other

47

Section A: The Business of Farming

inputs, such as labour, fuel, stock and maintenance of equipment may change; variable inputs ► these are referred to as variable inputs.

Costs costs ► r , Explain the meaning of inputs' in relation to farming.

fixed costs, variable costs ►

r Group the following inputs into fixed inputs and variable inputs: land, fertilisers, pesticides, seeds, tractor, fuel, buildings, labour and equipment.

Costs are the expenses involved in any transaction. Farmers have to buy farm inputs and convert them into products. Costs that do not change, such as land rental, machinery and buildings, are referred to as fixed costs. Variable costs are those costs which change with the level of production. These include the cost of fuel, feed, fertilisers and pesticides. Obviously, if a farmer decides to increase the number of broiler chicks, then more feed will be needed (see Table 4.2).

Inputs : Broiler Production Fixed Variable Broiler chicks Land Buildings

Feed

Equipment

Medication

Pick-up truck

Labour Fuel Maintenance: machinery and equipment

Table 4.2 Fixed and variable costs in broiler production.

Output output ► yield ►

r : Explain the meaning of output.

Using Table 4.3, show how the total cost, the average cost and the marginal cost for 4 units of output have been calculated.

The output is the quantity of product resulting from a production process. It can also be called the yield or the return. The output may be expressed in metric tonnes (sugar cane), kilograms (sweet potatoes) or simply numbers of products such as lettuce or eggs. In economics, output is always measured in units. One unit could be 100 kg of sweet potatoes or 1000 table eggs. The production of further units of output would require a greater amount of inputs, which would increase the total cost to the farmer. Since most farmers operate with limited resources, they are limited in the maximum number of units of output they can produce. For example, a farmer would need to cultivate extra land, employ more labour and spend more on fertilisers if extra units of sweet potatoes were to be produced. The costs associated with output are: • fixed costs (FC) • variable costs (VC) • total cost (TC) • average cost (AC) • marginal cost (MC). Units of Output

Fixed Cost (FC) $

1

30

2

30

3

30

4

30

5

30

6

30

7

30

8 9 10

Variable Cost (VC) $ 70

Total Cost (TC) $

Average Cost (AC) $

Marginal Cost ( MC) $

100

1 00

100

160

190

95

90

240

270

90

80

310

340

85

70

370

400

80

60

426

456

76

56

474

504

72

48

30

514

544

68

40

30

537

567

63

23

30

57 0

600

60

33

Table 4.3 Output:cost relationships.

As can be seen in Table 4.3, at any level of output: total cost ► • total cost (TC) is fixed cost (FC) plus variable cost (VC) average cost ► • average cost (AC) is total cost (TC) divided by the number of units of output marginal cost ► • marginal cost (MC) is the increase in total cost (TC) which is derived from the last unit of commodity that is produced. 48

4 • Economic factors of production

Returns Farmers put their inputs into agricultural enterprises with the aim of making a profit. The yields of the crop or the profits made are called the returns. If a particular input is increased, unit by unit, there is an incremental increase in output up to a point. After this point, any further increase in input does not increase the rate of output. The rate of increase of output declines with each additional unit of input (see page 47 for the 'law of diminishing returns'). For example, in producing one ha of sweet potatoes, a farmer may gradually increase the units of fertiliser (input) and find that his yield (output) has also increased progressively up to a maximum point. After this point, continued increase in the units of fertiliser results in a steady decline in output. These features are referred to as increasing returns when the output increases; and diminishing returns as the output declines. Table 4.4 demonstrates this principle. Figure 4.5 shows the data in Table 4.4 plotted on a graph.

returns ►

increasing returns, diminishing returns ► 400 5 0

Unit of input (Fertiliser) 1

300

0

.s 0

200

10 0

0 100

0

1

2

3

4

5

6

7

Units of input (fertiliser)

Figure 4.5

A graph showing how an increase in output varies with an increase in input.

marginal output, marginal return, marginal product, marginal yield ►

Explain the meaning of marginal return and diminishing return.

I— . . Fixed input Land (1 ha) 1 1 1 1 1 1 1 1 1 1 1 1 Table 4.5

Variable input Fertiliser (10 kg/unit) 1 2 3 4 5 6 7 8 9 10 11 12

8

Output of sweet potatoes in kg I wo

Increase in output in kg

2

1250

250

3

1650

300

4

2000

350

5

2275

275

6

2425

150

2525

100

Table 4.4 The effect of increasing input on output. Increasing returns mean that each additional unit of input increases total outputs successively. The successive increase in total output for each additional unit of input is called marginal output, marginal return, marginal product or marginal yield (these all mean the same). Decreasing returns mean that each additional unit of input increases total output at a declining rate. This declining rate of increase in total output, resulting from each successive unit of input, is called a diminishing return. The 'law of diminishing returns' is also known as the 'law of diminishing marginal returns' and also as the 'law of marginal proportions'.

Total output Corn (100 kg/unit)

Marginal output Corn (100 kg/unit)

Average output Corn (100 kg/unit)

7 13

4 6

3.0 3.5 4.3

20 25 28 30 31 31 30 27 22

7 5 3 2 1 0 -1 -3 -5

5.0 5.0 4.7 4.3 3.9 3.4 3.0 2.5 1.8

Remarks

Max MP MP = AP

Max TP MP = zero Negative MP

The effect of fertiliser input on a corn crop. TP = tota product, MP = marginal product and AP = average product.

49

Section A: The Business of Farming

rr

State the law of diminishing returns.

1

rr

In the example in Table 4.5, how many units of fertiliser should the farmer apply in order to gain the maximum marginal output from his corn

In Table 4.5, the fixed input is the land, the va ri able input is the quantity of fe rt iliser, and the output or product is corn. Total output is total yield or total product. Average output (average yield or average product) is calculated by dividing total output by the number of units of fe rt iliser applied at any level of production. Marginal output (marginal yield or marginal product) is the increase in total output which results from increasing the variable input by one unit. For example, if 6 units of fe rt iliser are applied, total output is 2800 kg of corn, average output is 470 kg of corn and the marginal output is 300 kg of corn.

I

The total product curve

crop?

total product curve ►

Figure 4.6 shows the relationship between the variable input and the total output. This is called the total product cu rv e. It rises sharply and then levels off before declining. The output increases first at an increasing rate, then at a decreasing rate to a maximum level and then declines. The maximum rate is reached at D, where the marginal product cu rv e reaches 0. The declining rate of increase starts at A where the marginal product is at its maximum.

Average product curve average product curve ► The average product cu rv e is obtained from the total product divided by the number of units of variable input, so the shape of the curve depends on the shape of the total product cu rv e. The maximum is reached at C where the average product is equal to the marginal product.

Marginal product curve marginal product curve ►

arc

___

The marginal product curve increases very sharply in the beginning, reaches a maximum and then declines. When the average product is at a maximum (C), then the marginal product is equal to the average product. The marginal product becomes 0 (E) when the total product cu rv e is at the maximum (D).

Describe the shape of the marginal product curve.

stage 2

stage 1

;

^

I

I

I

I

^

I

I

I

I

I

I

I

I

I

I

stage 3

D total product curve

m 0 0 U

a 0 O

B

I

I

I

^ C

I

average product cu rv e

E 0

INPUT: fertiliser (kg)

marginal product curve

Figure 4.6 Diminishing returns: total, marginal and average product.

The three stages Look at Figure 4.6. In Stage 1, the total product is increasing sharply and the point is reached where average product equals marginal product. In Stage 2, both average product and marginal product are declining although total product is still increasing, but at a decreasing rate. Stage 3 represents the inefficient stage of production as total product and average product decrease and marginal product shows negative values. It is costly to increase the variable input beyond the point where the total product is at its maximum. Relevance and application The 'law of diminishing returns' is of relevance to farmers and ho rt iculturalists. Producers need to remember that there is increasing growth and development in crops and animals up to a maximum point, beyond which diminishing returns set in. In producing broilers, for example, diminishing returns become evident

50

,

4 • Economic factors of production

after 8 weeks when they have reached an average weight of 2 kg. From this time onwards, the birds consume an enormous quantity of feed but the rate of increase in their body weight declines. Therefore feed is wasted if they are kept until they reach 3.5 kg. In the case of crops, there may be wastage of fertilisers, organic manure, pesticides and labour if variable inputs do not result in the maximum marginal product. Such resources could be used more profitably to produce other short-term crops or to raise a new batch of early maturing animals.

Explain why Stage 3 is described as the inefficient stage of production.

4.5 Demand, supply and price relationships Sellers mark their goods at a specific price or price range to dispose of their stock. In this way, they hope to make a profit, enabling them to continue their business and perhaps expand it. If the price of the goods is not controlled by the government, the seller is free to fix a price based on market intelligence, the business location, and the total cost involved in buying and transporting the goods to the place of business. The willingness of the consumer to buy goods depends on the price as well as the supply. If the price is too high, sales are poor because of low demand. If the What factors are considered by sellers when price is too low, demand will be high. The seller will be able to sell all his goods, but fixing the price of a commodity? his profit may be very small and this could affect his business. Obviously, for any commodity, there is an optimum price which consumers will be willing to pay and at which the seller may sell all his goods. This optimum price requires decision-making on the part of the seller. The State TWO economic factors which affect the decision is based on the strength of demand from prospective buyers and a willingness of consumers to purchase a particular product. guarantee of a regular supply of goods.

1

Demand demand ► Demand is the quantity of a product which consumers are willing to buy at a certain price at a particular time. Demand is directly related to price. If the price is high, demand will be low. Lowering the price will result in an increase in demand for the product.

The demand schedule demand schedule ►

demand prices ► Price per kg ($)

Quantity of cabbage demanded in kg

The demand schedule for a product is the sum of all the individual consumers' demands, tabulated to show the relationship between the quantity of the product demanded at various prices. The demand schedule is also known as the market demand schedule and the prices are called demand prices. The information in Table 4.6 can be shown graphically (see Figure 4.7). 7 6

3.00

1500

5

4.00

1200

4

4.50

800

5.00

600

5.50

400

6.00

300

6.50

200

Table 4.6 A market demand schedule for cabbage.

3 2 1 0

1

I

200

300

[

400

600

800

1200

1500

Quantity of cabbage purchased (kg)

Figure 4.7 A demand curve for the cabbage data shown in Table 4.6.

51

Section A: The Business of Farming

In Figure 4.8, the curve DD shows at a glance the relationship between price and the quantity bought. It is not necessary to have actual prices and quantities marked on the axes. You can see that prices and quantity increase evenly from 0 to Y and demand curve ► from 0 to X respectively and that the typical demand curve DD slopes downward from left to right. Y

U

a

0

X

Quantity

Figure 4.8 A typical demand curve.

The `law of demand' 'law of demand' ►

The first law of supply and demand is also called the 'law of demand'. It states that the lower the price, the greater the quantity that will be demanded. Change in demand In Figure 4.9, the demand curve DD represents the same conditions of demand at a certain time. Generally, a change in demand results in a new demand curve which represents new conditions of demand and time. Y

D

Dz

Di

m

U

Dz

so 0

Qi

Q

02

X

Quantity

Figure 4.9 Change in demand curve.

In Figure 4.9, the original state of demand is represented by curve DD. The price is OP and the quantity demanded is OQ. If there is a change in demand, represented b' then at the old price of OP the quantity now demanded is 0Q 1 . This quantitl is smaller than the former quantity. Similarly, a change of demand represented bi the demand curve D 2 D 2 shows that at the same price of OP, a larger quantity of OQ is demanded.

52

Factors affecting change in demand Some of the factors bringing about a change in demand are: • change in tastes and preferences • change in income

4 •

Explain the relationship between the demand and the price of a commodity.

• • • • • •

Economic factors of production

replacement of old products with new ones (technical innovations) change in the prices of other commodities change in population future trade expectations taxes and duties advertising the product.

Supply supply ►

Supply is the quantity of a commodity that is placed on the market at a particular time and at a certain price. This supply does not include the entire stock, but only the amount that is brought on to the market at the prevailing price and time. As with demand, the supply of a product is directly related to the price of that product. Obviously, sellers want to release a larger amount of a product on the market when the price is at a high level.

The supply schedule supply schedule ►

supply prices ►

The supply schedule for a commodity is the grand total of all the amounts of the individual sellers, tabulated to show the relationship between the quantity offered for sale at different prices. This is also known as the market supply schedule and the prices in the schedule are called supply prices. A supply curve (Figure 4.10) can be plotted using the data in Table 4.7. 8

Price per kg ($)

Quantity of cabbage supplied in kg

7 6 Ti co

5

7.00

1100

6.50

1000

5.50

800

5.00

600

4.50

500

1

4.00

400

0

3.00

200

Table 4.7 A market supply schedule for cabbage.

4 3 2

200

400

600

500

800

1000

1100

1200

Quantity of cabbage supplied (kg)

Figure 4.10

A supply curve for the cabbage data in Table 4.7.

Figure 4.11 shows a typical supply curve. This shows that a larger quantity 0Q 2 is supplied at the higher price OP, and that the curve SS slopes upwards from left to right.

P2

Q.

P

0

Q1

Q2

X

Quantity

Figure 4.11 A typical supply curve.

53

Section A: The

B

usiness of Farmin.,

Section A: The Business of Farming

The 'law of supply' 'law of supply' ► The second law of supply and demand, also called the 'law of supply', states that the higher the price, the greater the quantity that will be supplied.

Changes in supply As with demand, a change in supply results in a new supply curve (Figure 4.12) which represents new conditions of supply and time. Y

F 0) U

0

ul

u

n

U2

Quantity Figure 4.12

Graph showing changes in supply.

In Figure 4.12, the initial state of supply is represented by the curve SS, the price is OP and the quantity supplied is OQ. If some factor causes the supply to change, the new conditions of supply are represented by S,S,, which is smaller than the former. quantity. A change of supply represented by S 2 S 2 , indicates that at the same price of OP, a larger quantity 0Q 2 is supplied.

Factors affecting change in supply

1 ri'

1i

List FOUR factors which affect the change in supply of a product.

I

These factors cause a change in supply: • high consumption of their own product by the producer (less product is supplied to the market) • change in cost of production • change in technique of production • changes in the weather • taxation of commodities • future expectations.

Pricing

Explain the term equilibrium price. U

equilibrium price ►

M

The pricing of commodities in a perfect market occurs through the interaction of the market forces of supply and demand. The price of the product is determined by the demand in relation to the conditions of the supply at a particular time. At some point, these two forces are brought into balance (or equilibrium). The equilibrium price is the price at which demand and supply are equal.

Y

S

D

N

a` P

M

s

0

0 Quantity

Figure 4.13

The equilibrium price.

4 Economic factors of production

equilibrium point ►

Figure 4.13 shows that at the price OP, the quantity supplied (OQ) is the same as the quantity demanded (OQ). The point at which the demand curve DD intersects with the supply curve SS is called the equilibrium point. At any price higher than the equilibrium price OP, supply will exceed demand and the sellers will have a substantial quantity of unsold products. At any price lower than the equilibrium price OP demand will exceed supply and there will be a shortage of that particular product.

The effect of changes in demand and supply

How is the price of a product determined in a perfect market?

• An increase in demand tends to increase price and increase supply. • A decrease in demand has the opposite effect, resulting in a lowering of price and the quantity supplied. • An increase in supply tends to lower price and increase demand. • A decrease in supply will increase price and reduce the quantity demanded.

Elasticity of demand and supply elasticity ► Elasticity measures the degree of responsiveness of each of the market forces elasticity of demand (E d ) ►

(supply and demand) to changes in price. It also enables the government to set up appropriate policies to regulate the economy. The elasticity of demand (E d ) is the degree of responsiveness of the demand for a product to a change in its price. It is expressed as:

Elasticity of demand (E (Ed) d =

percentage change in the quantity demanded percentage change in price

Elasticity of demand may be: • elastic — greater than 1: a small change in price results in a big change in the quantity demanded • inelastic — less than 1: a considerable change in price causes a small change in the quantity demanded • unitary — equal to 1: a change in the price brings about a proportionate change in the quantity demanded.

elasticity of supply (E s ) ► Similarly, elasticity of supply (E s ) is the degree of responsiveness of supply to a change of price.

Elasticity of supply (E (Es) = s

percentage change in quantity supplied percentage change in price

Elasticity of supply may be: • elastic — greater than 1: a small change in price results in a big change in the quantity supplied • inelastic — less than 1: a considerable change in price causes a small change in the quantity supplied • unitary — equal to 1: a change in the price brings about a proportionate change in the quantity supplied.

Price mechanisms price mechanism ►

A price mechanism refers to a wide variety of ways to match up buyers and sellers. It enables the distribution of scarce goods to consumers and scarce factors of production to producers. The demand of consumers, or consumption, encourages producers to expand their business. This stimulates demand for factors of production and for an increased supply of commodities. Demand, supply and

55

" AV

The

Bu

siness of Farming

Section A: The Business of Farming

price are dependent on one another and the equilibrium price equates de with supply. What is the purpose of raising prices by taxation? I The government may put price controls on certain commodities. Max prices may be fixed for certain products to protect consumers, especially I members of the community. Minimum fixed prices may be set to F agricultural producers against a fall in income due to a bumper harvest. Practical activity: The purpose of raising prices by taxation is to reduce consumption of comm( Practise plotting demand and which are thought to be harmful to the economy. This can be done to t the loss of foreign exchange as a result of the import of goods. Subsidies n supply curves from data which imposed on certain foodstuffs to keep the cost of living down or to encc will be supplied by your teacher. domestic production.

List F suppl

Explain t

54

• The three major components of the economy of a country are prods marketing and consumption. • Production focuses on the manufacture of a wide range of goods ar provision of services. • Primary production is the production of goods or raw materials which n consumed. • Secondary production is the processing of goods and raw primary produ • Production produces capital goods, luxury goods and consumable goods. • Services may be commercial, technical or professional. • Consumption involves the purchase and use of goods and services by cons. It is the fuel which keeps the engine of production going. • Consumption is influenced by income level, needs and health concerns. • Marketing is the link between production and consumption. It promo' flow of goods and services from the producer to the consumer. • The key personnel in the marketing process are middlemen. • Marketing functions can be classified into four groups: mercha: handling, processing and supporting. Agricultural production is depen land, labour, capital and management. • Land may be owned, rented or leased. The suitability of land depend topography and climate. • Labour is a major factor in any agricultural enterprise. Small farms are by farmers and rely on self-labour and family labour. • Larger farms employ labour, which may be seasonal to cope with pla harvesting, tasks for specific hours or contract work for land prepara • Farm managers may be responsible for specific enterprises on large f • Capital is needed for buying resources such as land, tractors and bui • Farmers may obtain loans from institutions such as banks and credi • Management is essential for the effective running of an agricultural Good management is the ability to organise resources and combir make a profit. • Inputs are factors or resources which are used to achieve an outco • In farming, the inputs are land, labour, planting materials, fertilisers a • Fixed inputs are land, machinery and farm buildings. Variable inpr seeds and fertilisers. • Costs are the expenses involved in any enterprise. Fixed costs, su' buildings, do not change; but variable costs change with the level • Output is the quantity of product that is produced. It may be knc return. • Output is measured in units, e.g. tonnes of sugar cane or kilopotatoes.

'and Rim )rer tea ties uce be a e g

he )e

s.

e

4 • Economic factors of production

• Increasing the number of outputs means that the number of inputs has to be increased. • Returns are the yield of the crop or the profit made. • If an input (such as the quantity of fertiliser used) is increased, then the output increases progressively up to a maximum point. • The successive increase in total output for each additional unit of input is called the marginal product. • After the maximum has been reached, addition of extra units of fertiliser results in a steady decline. This declining rate of increase is called a diminishing return. • The law of diminishing returns is of relevance to farmers as it helps them to avoid wasting valuable resources on inputs which do not increase profits. • Demand is the quantity of a product which consumers are willing to buy at a certain price at a particular time. • The lower the price, the greater the quantity that will be demanded. The higher the price, the greater the quantity that will be supplied. • Supply is the quantity of a commodity placed on the market at a particular time for a certain price. • The pricing of commodities depends on the interaction of supply and demand. • The equilibrium price is the price at which supply and demand are equal. • Changes in supply and demand can alter the price of a commodity. Demand, supply and price are dependent on one another.

1701

Production, consumption and marketing.

1T02 To satisfy people's wants; to promote economic welfare; to improve living standards; to create wealth. 1703

Primary production refers to goods and products that are produced initially, such as sugar cane and potatoes. Secondary production involves the processing of the goods into manufactured items, such as sugar and potato chips.

MN Consumption involves the purchase and use of goods and services by consumers. ITO Any four from: income level; satisfaction; religious beliefs; health reasons; aesthetic reasons; product-substitutes. IT06

Merchandising — includes buying, pricing and selling of goods. Handling — transport of goods, assembling, grading and storing. Processing — manufacturing, packaging and labelling. Supporting — includes financing, enabling all other functions to be carried out smoothly.

1107

Middlemen operate between producers and consumers. They act as agents, brokers, wholesalers and retailers.

1108 The topography, whether hilly or flat; the climatic conditions, seasonal fluctuations in rainfall and temperature; soil fertility and suitability for different crops; cost of land. 1109

Land is used for housing schemes; over-cultivation and loss of soil fertility also cause loss of agricultural land.

IT010 Labour is considered as the total cost and the total number of man-hours involved in the production of a commodity. 11011 Self-labour and family labour can increase farm profits as no money is actually paid out to the workers. The cost of the labour is not considered as part of the cost of production. 17012 Capital resources available to farmers include commercial banks, credit unions, co-operatives and agricultural banks.

57

W

Section A: The Business of Farming

IT013 Depreciation is when the monetary value and productive value of a resource decreases with time. IT014 The effective and efficient use of resources on the farm. ITQ15 Planning, organising the workers, directing the workers, supervising farm operations and managing the finances. ITQ16 Inputs include land, machinery, labour, buildings, equipment, planting materials, fertilisers and pesticides; anything which is put into an agricultural enterprise to achieve an end result. IT017 Fixed inputs are: land, tractor, buildings and equipment. Variable inputs are: seeds, fertilisers, pesticides, fuel and labour. 11018 The quantity of product from a production process, otherwise known as the yield or the return. 11019 Total cost is the fixed cost plus the variable cost (30 + 310 = 340). Average cost is the total cost divided by the quantity produced (340-4=85). Marginal cost is the increase in total cost derived from the last unit produced (340 — 270 = 70). 11020 Marginal return is the successive increase in total output for each additional unit of input. Diminishing return is the declining rate of increase of total output resulting from each successive unit of input. IT021 The law of diminishing returns states that if one or more inputs are fixed and increasing amounts of one variable input are added, then the marginal output per unit of the variable input will increase initially to a certain point and then decline. 11022 4. 11023 The marginal product curve increases sharply, reaches a maximum and then declines. ITQ24 Stage 3 is described as the inefficient stage because money is wasted on inputs that do not increase the output. 11025 The total cost of buying and transporting the goods, together with market intelligence regarding supply and demand. 11026 The price and availability. 11027 The lower the price, the greater the quantity that will be demanded. 11028 Any four from: less supplied to market; change in cost; change in technique of production; variations in weather conditions; taxation changes; future expectations. ITQ29 The price at which demand and supply are equal. 11030 Through the interaction of the forces of supply and demand at a particular time. 11031 A tax is imposed on imported goods to benefit the economy by reducing demand for foreign goods and the loss of foreign currency. At the same time, it may encourage domestic production and consumption of certain commodities.

58

• Economic factors of production

Examination-style questions

Multiple Choice Questions 1. Which of the following is an example of secondary production? A pineapples B sweetcorn C sugar D eggs 2. Which of the following marketing functions deals with fixing the price of products? A merchandising B handling C processing D supporting 3. Contract labour is most likely to be used by a farmer for: A daily milking of cows B land preparation C fertiliser application D harvesting the crop 4. Working capital consists of: A farm buildings B equipment costs C rent D labour costs 5. Which of the following is a cost which varies with the level of production? A machinery B buildings C fuel D land 6. The successive increase in total output for each additional unit of input is called the: A marginal product B increasing return C marginal cost D increasing product

Short answer and essay-type questions 7. (a) Distinguish between casual labour and permanent labour. (b) What factors contribute to the farm labour problems in most Caribbean countries? 8. (a) State the importance of management as it applies to agriculture. (b) Discuss TWO management practices that farmers should adopt to achieve maximum profitability from their land. 9. (a) Production is an economic activity or function. What are the other two economic activities? (b) Explain the meaning of production as it relates to the national economy. (c) Differentiate between primary production and secondary production, specifying examples of each. 10. (a) What factors are considered by sellers in determining the selling price of a commodity? (b) Discuss the relationship between the price of an agricultural product and consumers' willingness to purchase that product. 11. (a) State the law of demand. (b) Draw a labelled diagram of a typical demand curve. (c) List FOUR reasons for a change in demand for an agricultural product.

59

Section A: The Business of Farming 12. (a) (b) (c) 13. (a) (b) 14. (a)

(b) (c) 15. (a) (b)

(c)

16. (a) (b) (c)

How is the pricing of commodities in a perfect market determined? Using a labelled diagram, explain the meaning of equilibrium price. Briefly discuss the 'price, supply and demand relationship'. Distinguish between price control and subsidies. Explain why price control measures are sometimes instituted by governments. Using appropriate examples, explain the meaning of: (i) fixed inputs, and (ii) variable inputs. State the importance of inputs in an agricultural enterprise. List some guidelines which farmers should adopt in selecting, maintaining and utilising farm inputs. Explain the meaning of: (i) fixed cost, and (ii) variable cost, stating an example of each. During 2004, Farmer Seema, who reared pigs, was charged water rates at $210.00 per quarter, even though she used less water during certain months of the year. State (i) the name of this type of cost, and (ii) the reason for your answer to (b)(i). Farmer Seema paid Dr Marie for veterinary services on three occasions during 2004 when a few of her pigs were ill. (i) What type of cost was this? (ii) State a reason for your answer to (c) (i). Distinguish between input and output. Explain how input, output and cost are interrelated. Copy and complete the table which shows output-cost relationship:

Unit of Output 1 2 3 4 5 (d)

60

($)

($)

($)

Fixed Cost (FC) 20 20 20 20 20

Variable Cost (VC) -----130 190

Total Cost (TC) 80 ----210 264

----280

-----

Explain the meaning of marginal cost.

($) Average Cost (AC) 80 75 -----66

($) Marginal Cost (MC) 80

-----

36

----60 -----

............

Trade dgFEEITElltS

By the end of this chapter you should be able to:

3 3

describe some international trade agreements that affect the Caribbean understand how these trade agreements affect the agricultural sector

,,/ evaluate their effects on farming and on the peoples of the Caribbean.

Concept map Trade agreements

International trade agreements

Effects on the Caribbean

Caribbean Single Market and Economy (CSME)

World Trade Organisation (WTO)

—

Agricultural sector

People

Free Trade Area of the Americas (FTAA)

Lome I—IV

International Sugar Agreement (ISA)

61

Section

A:

The Business

of

Farming

5.1 The effect of international trade agreements

National Marketing and Development Corporation ( NAMDEVCO) ►

If a country is to earn foreign currency, it needs to sell goods and services to other countries. Often, international trade agreements involve goods and services from one country being exchanged for the goods and services of another country. These agreements have to be carefully set up. In Trinidad and Tobago, the government operates the National Marketing and Development Corporation (NAMDEVCO). The aim of this is to identify market opportunities for agricultural products locally, regionally and abroad. Some of the services of interest to exporters include: • identifying export markets • linking buyers, sellers and producers • research into the requirements of foreign markets • the provision of guidelines on variety, quantity, quality and packaging • daily prices of commodities in international markets • the provision of advice on insurance and finance to exporters and importers.

The Caribbean Single Market and Economy (CSME) Caribbean Community (CARICOM) ► Caribbean Single Market and Economy (CSME) ► CSME operations

removal of barriers to trade free movement of services

free movement of goods free movement of capital

Figure 5.1 CSME.

free movement of people

The functions of the

In 2006, after considering the challenges of an increasingly globalised economy and the need to increase competitiveness of its goods and services, the Caribbean Community (CARICOM) set up the Caribbean Single Market and Economy (CSME). The CSME (Figure 5.1) enables free movement of goods, services, capital and people across member states in the Caribbean. This means that production and marketing operations are promoted and supported in an enlarged, single economic area. There is a better environment for the competitive production of goods and services for external and intra-regional markets. Entrepreneurs in the CARICOM region are able to: • use their talents and resources more fully • trade freely without hindrance • establish and service markets in other states • attract capital or invest and use funds in another state • hire skilled workers from any of the member states, resulting in greater efficiency, competitive production and increased profits. At present, there are 15 full members of CARICOM of whom 12 are members of the CSME. Montserrat is a full member of CARICOM and awaits approval for membership of the CSME. Haiti and the Bahamas are full members of CARICOM but have not joined the CSME. The introduction of a single currency is scheduled for completion between 2010 and 2015. The removal of trade barriers and the opening up of new opportunities for over 6 million CARICOM nationals (14 million if Haiti is included) enables the CSME to stimulate growth.

Free movement of goods To enable free movement, the following measures will be taken: • there will be no import duties on goods originating from the CARICOM region • tariffs and quantitative restrictions will be removed in all member states • intra-regional imports will be treated differently from extra-regional imports • there will be agreed regional standards for the production of goods within the CARICOM region providing a major incentive for high quality products from producers and manufacturers • CARICOM producers and manufacturers will be able to market their goods to over 6 million people (14 million if Haiti is included).

62

5 Trade agreements

Free movement of services Member states will be required to: • remove impediments restricting the right of any CARICOM national to provide regional services • ensure that nationals from other member states have access to land, buildings and other factors of production on a non-discriminatory basis for the purpose of providing services to the region.

Free movement of capital Free movement of capital will: • enable CARICOM nationals to transfer money to any member state electronically and also through bank notes and cheques; no new monetary restrictions will be added and existing ones will be removed • promote and increase investment regionally • allow firms access to a wider market for raising capital at competitive rates, so enabling the productive sectors to become more competitive regionally and internationally • foster the development of a regional capital market which will increase the attractiveness of the region for investment.

Free movement of people

What do the initials CSME stand for?

1

State the main role of the CSME.

1

List FOUR operations of the CSME.

1

Free movement of people will: • promote a closer union among the people of the CARICOM member states • abolish discrimination on grounds of nationality in all member states • entail the removal of work permits for certain categories of workers • encourage an interchange of managerial, professional and technical expertise within the region • enable certain categories of workers to travel freely to member states and enjoy the same benefits and rights regarding conditions of employment as those given to national workers. The CSME is of particular importance in the agricultural sector, making it easier for the marketing of produce, securing investments and the movement of workers. All the points made generally about the free movement of goods, services, capital and people can be applied to any agricultural enterprise or associated business.

The World Trade Organisation (WTO) World Trade Organisation

( WTO) ► The World Trade Organisation (WTO) is an international organisation which promotes free trade by persuading countries to abolish tariffs on imports and other barriers to trade. It is the only international body that oversees the rules of international trade. Functions of the WTO include: • checking free trade agreements • settling trade disputes between governments • organising trade negotiations. Decisions made by the WTO are absolute and all member countries must abide by its rules. Any country that breaches the rules may have trade sanctions imposed on it. As of July 2008, there were 153 member countries, representing 95% of world trade. Since 2001, the WTO has been trying to negotiate a trade agreement which would benefit poorer countries; but it has been hampered by disagreement between exporters of agricultural commodities in bulk and countries with large numbers of subsistence farmers. These countries want to ensure that there are safeguards to protect farmers from a drop in prices or a surge in imports. In 2008, member countries met in Geneva to resolve the problem, but the talks failed. Some

63

Section A: The Business of Farming critics maintain that free trade only leads to the rich countries becoming richer and

the poorer ones poorer. Free trade between Caribbean countries is now established, but better access to world markets could benefit the economy of the region. The WTO is working to encourage trade agreements that promote the economies of poorer countries.

Name THREE functions of the WTO.

The Free Trade Area of the Americas (FTAA) Free Trade Area of the Americas (FTAA)

►

FTAA objectives create regional integration and free trade

foster economic growth

conserve the natural environmen for future generations

promote sustainable development

reduce poverty and discrimination

Figure 5.2 Objectives of the FTAA.

List the major objectives of the FTAA.

At the Summit of the Americas in Miami in December 1994, 34 countries of the region agreed to the establishment of a Free Trade Area of the Americas (FTAA), in which barriers to trade and investment were to be progressively eliminated. The ultimate goal was to create an area of free trade and regional integration. The main objectives are shown in Figure 5.2. These objectives are similar to the objectives of CARICOM and the WTO, with the emphasis on removing trade barriers and opening up markets to member countries. Attempts have been made to ensure that any negotiations are transparent, taking into account the differences in the levels of development and the size of the economies in participating countries. It was agreed that negotiations should contribute to the raising of living standards, the improvement of working conditions and protection of the environment. FTAA agreements are consistent with WTO rules. Member countries may negotiate and accept obligations individually or collectively as a sub-regional group. for example CARICOM. Some trade expansion has occurred through bi-lateral trade deals with member countries and by the enlargement of existing agreements. The FTAA has not yet come into full effect: its target deadline was 2005 but this was missed. In June 2009, a fifth Summit of the Americas was held in Trinidad and Tobago. The focus was on human prosperity, energy security, climate change and sustainable development. The FTAA has not progressed as far as CARICOM and the CSME, so its benefits to Caribbean countries are limited. Where separate bi-lateral agreements have been reached, there are advantages to participating countries, but these agreements are not widespread and do not involve all countries.

The Lome Convention Lome Convention ► African, Caribbean and Pacific (ACP) countries ►

Cotonou Agreement ►

64

The Lome Convention was a trade and aid agreement between the European Community (EU) and 71 African, Caribbean and Pacific (ACP) countries. The first agreement was signed in 1975. It came into force in 1976 and provided a framework for co-operation between the members of the European Community and the developing ACP countries, which were formerly British, Belgian, Dutch and French colonies. The Convention allowed ACP agricultural and mineral exports to enter the European Community free of duty, a quota system for sugar and beef and 3 billion Euros of financial aid. Since 1976, the agreement has been renewed three times (Lome II, III and IV) and in 2000 it was replaced by the Cotonou Agreement. This was signed by 15 members of the EU and 79 ACP countries. The partnership between Europe and the ACP countries has charted a course from decolonisation to globalisation, geared towards global and political issues. The Cotonou Agreement is expected to run for 20 years. It focuses on a global approach to development and involves the progressive abolition of obstacles to trade between the countries in accordance with the rules of the WTO. The Cotonou Agreement aims to get rid of poverty in ACP countries and to promote their entry into the world economy. To stop the poverty, ACP countries need to: • face up to the challenge of competition on the international market • increase production, supply and the competitive nature of their products • maintain high standards of quality and performance • attract inward investment.

5 - Trade agreements

New ACP-EU Partnership Agreement (Cotonou Agreement) Economic Partnership Agreement (EPA)

FEATURES • focuses on trade liberalisation and globalisation: a global approach to development • provides for a new trade agreement, covering a period of 20 years • partnership agreement took effect from 1 January 2008 • guided by the World Trade Organisation (WTO) rules

ROLE OR FUNCTION • poverty eradication in ACP countries • progressive insertion of ACP countries into the world economy

CHALLENGES ACP countries must therefore: • prepare themselves • face competition on the international market • increase production, supply and the competitive nature of their products • maintain the desirable high standards of quality and performance • attract sound investment Figure 5.3 The Cotonou Agreement - a summary.

What is the function of the Cotonou Agreement?

List FOUR major challenges which ACP countries must face on the international market.

To improve the efficiency of production in the ACP countries, the Cotonou Agreement makes provision for granting subsidies for long-term development support and an investment facility to promote the private sector. The allocation of financial resources will be based not only on their needs but also on their performance levels. The challenges facing the ACP countries are large but not insurmountable. Enormous effort is required to strengthen their capabilities, relying not only on their own resources but also on external assistance as provided by the Cotonou Agreement. In this way, they will be able to adapt to developments in today's world.

The International Sugar Agreement (ISA) International Sugar Agreement In 1992, the International Sugar Agreement (ISA) was negotiated.

(ISA) ►

The objectives of the ISA are to: • ensure international co-operation in connection with world sugar matters • provide a forum for intergovernmental consultations on sugar and on ways to improve the world sugar economy • make trade easier by collecting and providing information on the world sugar market and other sweeteners • increase the demand for sugar, particularly for non-traditional uses.

International Sugar Organisation

The agreement is administered by the International Sugar Organisation (ISO) (ISO) ► based in London. There are 84 ISO member states, representing: • 82 % of world sugar production • 66% of world sugar consumption • 93% of world exports • 38% of world imports. The ISO is the forum for the exchange of views between the major sugar producing, consuming and trading countries. It carries out statistical analysis on the state of the world markets and holds seminars to increase knowledge of the sugar market.

65

Section A: The Business of Farming

Which of the objectives of the ISA is of interest to sugar growers of the region?

Practical activity: Working in groups, choose one of the specific trade agreements. Design a poster which summarises the agreement and its relevance to trade in your country.

66

1

Workshops are held on subjects of special interest to the sugar world. Topics hav■ included alternative uses of sugar and by-products, alternative uses of bagasse opportunities for sugar technology and sugar consumption patterns. Expanding from its traditional areas of sugar statistics, short-term and long term forecasting and market analysis, the ISO is now tackling issues like suga and health, sugar and the environment, fortifying sugar with vitamin A, organi sugar and the promotion of sugar. Sugar-related products like alcohol, molasses alternative sweeteners and biofuels are also of interest to the ISO.

Trade agreements are set up to sell goods and services to other countries. In Trinidad and Tobago, NAMDEVCO identifies market opportunities fo agricultural products locally, regionally and abroad. • The Caribbean Single Market and Economy enables free movement of goods services, capital and people across member states in the Caribbean. • Entrepreneurs in the CARICOM region can trade freely and establish market in other states. They can invest and use funds in other states and hire skilled labour from an member state. • The removal of trade barriers within the Caribbean benefits the Caribbeai region in international markets. • Members of CSME will be able to market their goods to over 6 million peopl in the Caribbean. • There will be no import duties on goods originating from the CARICOM region There will be no impediment to the provision of regional services. Money can be transferred to any member state. The development of a regional capital market will be encouraged. Free movement of people will abolish discrimination on the grounds nationality. Interchange of managerial, professional and technical expertise will b encouraged. • The World Trade Organisation promotes free trade by persuading countries t abolish tariffs on imports and other barriers to trade. It is working to encourage trade agreements that promote and benefit ti economy of poorer countries. • The objectives of the Free Trade Area of the Americas are similar to those of I/ WTO and CARICOM with the main emphasis on the removal of trade barrie and the opening up of markets to member countries. It has not come into full effect and does not seem to have progressed as far the CSME so its benefits to Caribbean countries are limited at the moment. • The Lome Convention was a trade and aid agreement between the EU and t ACP countries, which has been replaced by the Cotonou Agreement. • This agreement aims to eradicate poverty in the ACP countries and to prom( their entry into the world economy. The agreement provides for the granting subsidies for long-term development support. • The ACP countries need to be more competitive in international markets, increase production and to attract investment. • The International Sugar Agreement was set up to support countries wh were involved in the production, export and import of sugar. Its objectives are to ensure international co-operation in world sugar may and to provide a forum for improving the sugar trade. • •

5 • Trade agreements

1101 CSME stands for Caribbean Single Market and Economy. ITQ2 The removal of trade barriers between the countries of the Caribbean. 1103 The free movement of goods, services, capital and people in the Caribbean countries. IT04 Checking free trade agreements; settling international trade disputes; organising trade negotiations. ITQ5 To create regional integration and free trade; foster economic growth; reduce poverty and discrimination; promote sustainable development; conserve the natural environment for future generations. 1106 To eradicate poverty in the ACP countries and to promote their entry into the world economy. IT07 Competition on the international market; to increase production and supply of goods; to maintain high standards; to attract inward investment. IT08 To increase demand for sugar.

Examination-style questions

Multiple Choice Questions 1. Which of the following organisations makes trade agreements only within the Caribbean area? A FTAA B WTO C CSME D ISA 2. The Lome Convention was an agreement between: A the European Union and the FTAA B the European Union and the ACP countries C the WTO and the European Union D the FTAA and the European Union 3. The abbreviation ACP stands for: A America, Caribbean and Pacific B Africa, Caribbean and Polynesia C Asia, Caribbean and Pacific D Africa, Caribbean and Pacific 4. Which one of the following is NOT an objective of the Cotonou Agreement? A free movement of workers between countries B abolishing obstacles to trade between countries C eradication of poverty D financial aid to developing countries

Short answer and essay-type questions 5. Explain why it is necessary for a producer to understand the requirements of export markets before attempting to export goods to other countries. 6. (a) What is meant by a trade agreement? (b) Why are trade agreements beneficial to a country? 7. Describe the benefits of the Caribbean Single Market and Economy to the agricultural sector. 8. (a) Explain how the Cotonou Agreement was set up. (b) How does the Cotonou Agreement differ from other trade agreements?

67

............

gl

farm financing and S WIM

HITCH By the end of this chapter you should be able to:

3 3

describe how capital can be obtained from established sources

3 3

understand how co-operatives work

know how to complete a sample application form discuss the various incentives which may be given to farming.

Concept map Farm financing and support services

Incentives to farming

Co-operatives

Obtaining capital

Collateral

Types

Subsidies

Credit history

Roles

Price support

Budget estimate

Function

Tax exemption problems

Employment status

Management problems

Project proposal

6 - Farm financing and support services

6.1 Sources of capital What is capital? capital ► For the economist, capital is a factor of production used in combination with land, labour and management to produce goods and services to satisfy consumers. For the farmer, capital is both a physical and a financial resource; it is necessary as the total investment for any agricultural enterprise. Capital includes land, money, buildings, machinery and equipment, fuel and the raw materials needed to produce crops and rear livestock. So capital can include stock as well as money. CAPITAL • a factor of production • a physical and financial resource • the total investment in the agribusiness

FIXED OR DURABLE CAPITAL

OPERATING OR WORKING CAPITAL

• buildings • machinery • equipment • land

• stock of materials (consumables): fertilisers, pesticides, medication, feed, fuel • money (cash): to purchase land, planting materials, feed, medication, fuel, to pay wages for labour/services

• fences • tree crops • livestock • ponds

Figure 6.1 Fixed and working capital on a farm. A farmer's capital resources can be divided into fixed (or durable) capital and fixed capital ► operating (or working) capital. Fixed capital refers to those items on a farm that have more than one year of productive life. These are items that only need to be working capital ► renewed after many years. Working capital refers to those items which are needed for the everyday running of the farm and which are used up in the production of crops or livestock. Working capital can be divided into two sub-groups: stock ► • stock or consumables, such as feed, fuel, fertilisers, pesticides and medication cash ► • cash needed to purchase land, replenish the stock of materials and to pay for labour and other technical services. depreciation ►

I

What is the meaning of capital to a farmer?

Explain the difference between fixed capital and working capital, giving examples of each.

List reasons why capital is necessary for agricultural enterprises.

Farm buildings, machinery and equipment undergo depreciation every year. This means that each year they are worth a little less in financial terms. They also need regular maintenance so that the maximum productive service can be derived from them. Eventually the farmer has to replace these items because of their age, wear and tear and obsolescence. Land tends to appreciate in value. This means that it is worth a little more in financial terms each year. However, the farmer has to renew its fertility on a continuing basis. For many farmers, capital is a limiting factor. The amount of capital a farmer has at his disposal enables him to: • make decisions about the type and size of his farm, the type of crops to grow and the best system to use • decide on the level of mechanisation he can afford • buy the farm inputs, such as land and stock, that he needs • employ modern technology • generate farm income and profits • develop and improve the farming business • increase farm assets and values.

69

Section A: The Business of Farrhing

Sources of capital In the Caribbean, farmers may obtain capital, that is money (cash) and/or a stock of ag ri cultural mate ri als, from the following sources:

1. Government institutions Agricultural Development Bank ( ADB) ►

These include the Agricultural Development Bank (ADB), the Ministry of Agriculture and agricultural societies. The ADB and the agricultural societies offer loans at low rates of interest, usually from 3% to 6%. The Ministry of Agriculture arranges subsidised farm inputs (machinery, equipment, breeding stock, sta rt er colonies of bees, hybrid seeds and other planting mate ri als). They also arrange leases for state land. 2. Commercial banks/Enterp rises and insurance companies The rates of interest from commercial banks, insurance companies and financial agencies are higher than those from the government institutions (8% to 14%). The commercial enterprises sell land, planting mate ri als, machinery and equipment.

3. Credit Unions These offer loans at low rates of interest.

4. Co-operatives and Associations These organisations rent out machinery and equipment and offer loans at low rates of interest. Depending on the nature of the co-operative or association, planting mate ri als, breeding stock and sta rt er colonies of bees may be offered. 5. Sou-Sou Groups

In these friendly co-operative savings schemes, each person in a small group contributes every week or month, as agreed, an equal po rt ion of money. The sum of the group's total contribution goes to one member of the group in rotation, so that every month, week or fortnight one person benefits from a large sum of money, interest-free, that can be put to a particular use. In Dominica the practice is more often called a 'sub'. This system was more widespread before banks openly welcomed small-scale savers and before the Credit Union movement established itself in the 1950s and 1960s.

6. Money-lenders Loans from money-lenders have high rates of interest and relatively short repayment times. 7. Personal savings

The farmer may have saved money over a period of time from the profits of the farm.

8. Relatives List FIVE sources of capital available to farmers.

I

This may take the form of a loan, at a reasonable rate of interest, borrowed

machinery and equipment, or an inhe ri tance of land, cash, buildings or machinery and equipment.

^-

—

9. Friends

Name TWO government institutions and state the type of capital which they can provide to farmers. creditworthiness

farmer's

registration lifestyle and character

credit-rating and reputation

LOAN

I

How to obtain loans farm p ro posal budget estimates

farm records collateral,

security

and experience

guarantor

The farmer has to prove several things before getting a loan.

Figure 6.2

Friends may offer loans at reasonable rates of interest, or land, machinery, tree crops and livestock might be borrowed in a share-cropping arrangement.

To obtain a loan from a reputable financial institution, farmers need to fulfil ce rt ain requirements (see Figure 6.2).

Farmer's registration The applicant (farmer applying for a loan) must be a registered farmer. In Trinidad and Tobago, the registration of farmers is done by the Ministry of Ag ri culture at regional and county agricultural offices. Farmers who are registered are more favourably considered for loans, subsidies and other national incentives. In other terri to ri es, such as Jamaica, registration is via the Ministry of Agriculture.

6 • Farm financing and support services

Credit-worthiness credit-worthiness ►

The credit-worthiness of a farmer is a measure of the farmer's ability to pay off debts. It is determined on the basis of assets, liabilities and net worth. From information supplied by the applicant, the lending institution will know the monthly income and expenses of the farmer. They then judge whether he will be able to repay the loan if it is granted. Risk and uncertainty apply to agriculture so limited loans are sometimes made to farmers on the basis of their credit-worthiness. Often such loans are insufficient for the farmer to set up a new enterprise which could generate substantial profit. It is an advantage for a farmer to have a good credit-rating and reputation. A farmer who has borrowed money previously and repaid the loans promptly is more favourably treated than someone who has not asked for credit before. Normally, credit-rating and reputation are researched by the lending agency as part of the application process.

The farm proposal and budget estimate farm proposal ►

budget estimate ►

The farm proposal, outlines the farmer's intentions. It is a document which details his objectives, the enterprises he proposes, his farming techniques, the resources needed and the anticipated output and income. Using his farm proposal, the farmer prepares and submits a budget estimate for each of the enterprises he intends to pursue_The budget estimate justifies the amount of loan required for the proposed farming business. Some farmers approach financial agencies without detailed proposals and budget estimates. Renowned lending institutions require carefully prepared proposals and budget estimates and will not offer loans without these.

Farm records and experience Farm records provide documentary evidence of previous enterprises and justify the experience of the applicant. Many farmers keep poor farm records and are unable to satisfy the lending institutions as to their ability to run an enterprise successfully. It is difficult to judge the farming experience and 'track record' of an applicant if there are no records.

Collateral, security, guarantor collateral ► Financial institutions make sure that the farmer has some form of collateral or security to offer that will cover the total amount of the loan. This may be in the form of property such as land, a house, farm machinery, equipment or livestock. guarantor ► Often, a relative or friend serves as a guarantor, pledging their property as security for recovery of the loan should the farmer fail to repay it. Some farmers who operate small farms lack the collateral for loans and cannot find guarantors willing to pledge their personal property as security.

Lifestyle and character Honesty, sincerity, perseverance and a determination to work hard are character traits which are highly regarded. Farmers should aim to be good role models as they transact business with financial institutions.

Problems with obtaining loans Lack of collateral, poor credit-worthiness, insufficiently detailed farm proposals and budget estimates have been mentioned already as problems. In addition, farmers who find it difficult to meet the loan requirements of some institutions may be forced to take out loans with high rates of interest, or to make repayments over a shortened period of time. These types of loans are stressful for farmers, particularly if the agricultural enterprise is still being developed and not producing much income. 71

Section A: The Business

of

Farming

Credit supervision credit supervision ►

Some farmers may use their loans for purposes other than agriculture. Any farmer who obtains a loan from the Agricultural Development Bank undergoes credit supervision, where trained staff make regular farm visits, give technical advice and pay the fanner the money in phases until the enterprise is completed.

List FOUR requirements which farmers need to demonstrate when applying for a loan from a reputable financial institution.

Practical activities:

1

1. Practise completing a loan application form. 2. Collect information from banks and financial institutions about loans and credit facilities for farming enterprises.

Why is a farm proposal essential in an application

for a loan?

i. What are the problems associated with high interest loans? co-operative ►

r Why is a good credit-rating of benefit to an applicant for a loan? I

I

State the usefulness of credit supervision as it applies to a loan made to a farmer.

6.2 Co-operatives A co-operative is a legal organisation which enables its members, as a group, to improve their economic status in a competitive society. A co-operative is a business venture. It is voluntarily and collectively owned, controlled, operated, patronised and managed by its members on a non-profit or cost basis for the economic benefit of all its members. A co-operative (see Table 6.1) can be distinguished from any other business organisation by its guiding principles. These principles are referred to as the 'cooperative concept' (see Figure 6.3). Principle

democratic control joint ownership

open membership

team \ management

THE CONCEPT: GUIDING PRINCIPLES

service investments

patronmembers

non-profit business

Figure 6.3 The co-operative concept.

Open membership Joint ownership Democratic control Team management Patron-members Non-profit business Serviceinvestments Table

Explanation Membership is open to any person, regardless of gender, race, colour or creed. Each member is an owner of the co-operative. Control of the co-operative is based on each member having one vote and not on the amount of money a member has invested. Members operate and manage the co-operative as a team. Members are the patrons or customers and users of the services provided by the co-operative. Generally, business transactions are non-profit making and geared towards cost-recovery. However, any returns above cost are shared equitably amongst all the members. Members invest in the co-operative to be provided with certaix. services and not for a profitable financial return.

6.1 The major principles of co-operatives.

Roles and functions of co-operatives Co-operatives fulfil the following roles: • promote voluntary, open membership • pursue business ventures • encourage active participation and teamwork • generate collective ownership • encourage equity in sharing • operate on a non-profit or cost basis • improve the economic well-being of members • provide desirable services to satisfy patron-owners • generate greater bargaining power for better prices and contracts • attract governmental aid, resulting in benefits for patron-farmers.

1p

72

6 - Farm financing and support services

Co-operatives are important organisations in many countries and fulfil many functions. A co-operative helps its members to reduce operating costs, enables them to increase their levels of production so that they can increase their income, and challenges them to produce better quality produce and become more competitive. In a wider sense, co-operatives encourage agricultural development and reduce poverty. Group demonstrations and technical training sessions are organised more easily through co-operatives as members share a common interest. Greater interest in productivity and business enterprise is created.

Types of co-operatives Co-operatives can be grouped in two ways: by their function or by their links with other groups.

Co-operatives grouped by function There are seven types of co-operatives (see Table 6.2) which perform different functions. Type of co-operative Produce Consumer

Purchasing

Processing

Marketing Commodity

Service

Table 6.2

Function Members take part in joint-venture production enterprises producing a range of products which are collectively owned. This is organised for the bulk buying of consumer products for the membership. The co-operative is owned, operated and managed by its members. This is engaged in bulk purchasing and supply of raw materials, such as planting material, feed, chemicals and fertilisers, to its members. In this type of co-operative, packing, processing or manufacturing of farm products (fruit, vegetables, milk and meat) from members is carried out. This is organised by its farmer members to collect, grade, package and sell their produce. Members focus on production of the same commodity so the co-operative is named accordingly, for example Co-operative Citrus Growers, Dairy Farmers' Co-operative and Cedros Fishing Co-operative. Each provides one or a combination of essential services to members. There are service co-operatives for credit, livestock breeding, farm machinery and equipment, transportation, drainage and irrigation, cold storage, maintenance, security, insurance, nursery and pre-school provision.

The functions of different types of co-operatives.

Co-operatives grouped by links Most co-operatives are linked in groups at local, regional and national levels: • Local co-operatives offer members representation and services at the village or district level. • Regional co-operatives provide services and representation at the county or regional level, based on nominees from local co-operatives. • National co-operatives supply representation and services at national level, through nominees from the regional co-operatives, who are representatives of the various local groups.

73

Section A: The Business of Farming

What is a co-operative?

I

Name THREE different types of co-operatives and explain the functions of each.

There are also: • independent co-operatives, not affiliated to any other co-operatives • federated co-operatives, comprised of small local co-operatives, operating as an integrated unit and banded together for greater economic power and efficiency • centralised co-operatives, composed of delegates from local co-operatives, operating as a centralised control unit and initiating directives from the local co-operatives for action; the structure of these means that each member cannot participate directly in the decision-making process.

Managing a farmers' co-operative What are the major principles of co-operatives? Management of a farmers' co-operative is a shared responsibility between the Chief Executive Officer, the Board of Directors and the patron-owner-members. Policies and regulations drawn up by the Board and approved by the general membership are used for the day-to-day running and management. business membership volume issues Management is aimed towards the economic well-being of the farmers, who are the patrons, users and owners of their co-operative. It uses managerial talents and ocai approved policies to achieve results using the limited resources available. Problems ineff ciency competition may sometimes arise for the management team (see Figure 6.4). limited capital

global issues

Limited capital

Co-operatives operate with limited amounts of finance (or capital) which come PROBLEMS from its patron-members. It is not possible to provide a wide range of services or to generate funds through public investment, as in a non-co-operative business. Such Figure 6.4 Some problems in procedures are not allowed according to the co-operative concept. This means that managing a farmers' co-operative, the co-operative may have to seek credit or ask patron-members for more money to finance the necessary services. It is important that the farmer elected as the manager or Chief Executive Officer has the skills and experience to make decisions promptly.

Business volume The volume of business transactions fluctuates between high and low. It depends on how often members use the services they have provided for themselves. High levels of business volume help a co-operative. It is up to members to ensure that they use the services to sustain their co-operative.

Membership issues

Practical activities: 1. Visit an established farmers' co-operative and find out how it is organised and managed. 2. Find out about the different types of co-operatives in your area.

In a co-operative, each member is a patron, a user and an owner. Every member needs to demonstrate a sense of ownership, loyalty and commitment. In some cases, members do not give their full support by way of their share contributions and business patronage. Members need to face up to the shared responsibility of supporting their co-operative investment.

Local competition Co-operatives often face competition from the local business community who feel that they are an economic threat to their clients and business. Large local businesses use bulk buying and obtain discounts from merchant suppliers. In retailing their goods, they may offer lower prices than the co-operatives. Members of cooperatives need to focus their efforts on good management, greater production and better quality.

Global issues

List the problems of managing a farmers' co-operative.

74

Issues such as globalisation, trade liberalisation, competitiveness and quality standards directly affect farmers' co-operatives. Such issues may make it difficult for co-operative managers to meet the challenging task of international requirements and to educate, train and motivate their members.

• Farm financing and support services

6.3 Incentives given to farming Risk and uncertainty The agricultural sector is affected by factors which involve risk and uncertainty. These include: • the weather • natural disasters (volcanoes) • over-production and under-production • fluctuating market prices • increasing costs of inputs • unstable incomes of farmers. Governments can help to stabilise production, market prices and farm incomes through subsidies and price support policies.

Price support guaranteed prices ►

Farmers can be guaranteed minimum cost-based prices by the government, referred to as guaranteed prices, for selected crops or commodities. The commodities may be export-oriented (sugar cane, cocoa, coffee, citrus fruits and bananas) or for domestic consumption (rice, root crops, milk, mutton and eggs). These guaranteed prices are incentives to production. They demonstrate commitment on the part of the government. In Trinidad and Tobago, price support is offered to farmers for the commodities shown in Table 6.3. Commodity

Guaranteed price ($)

Unit

Cocoa

12.00

kg

Coffee

11.00

kg

Oranges

21.00

crate crate

Grapefruit

13.00

Rice paddy

2.20

kg

Milk

3.10

litre

Copra

3.04

kg

Corn (dry)

2.20

kg

Sugar cane

153.77

Table 6.3

tonne

Price support for selected commodities.

Subsidy subsidy ►

tax exemptions ►

A subsidy is a financial incentive to farmers or producers for infrastructural development, technical operations, purchasing farm inputs and establishing agricultural enterprises. Normally, specific subsidies are offered to farmers, but the government's commitment is only towards a percentage of the cost and up to a maximum amount of money. Some examples are listed in Table 6.4, overleaf. In many Caribbean countries, there are tax exemptions for agricultural inputs and import duty concessions on farm machinery. Most domestic unprocessed foods are exempt from general consumption tax. These measures encourage agricultural enterprises and create employment in the agricultural sector.

icticat activity: Working in groups, choose one commodity that is exported and one commodity that is produced for domestic consumption. For each of the chosen commodities, find out what benefits the producer gains from price supports and subsidies. Present your findings to other groups in your class.

75

Section A: The Business of Farming

Agricultural areas Machinery and equipment Vehicles Water for agriculture Q

Soil

What is the difference between price support and a subsidy?

1

z

List FOUR functions of price supports and subsidies.

conservation Livestock (ruminants) Fisheries

Specific subsidies (examples)

% cost

Maximum $

Solar equipment and biodigesters.

50

5000.00

Trailers. New tractors.

50

3000.00

15

25 000.00

New pickups and jeeps. Wells, dams, ponds. Irrigation equipment. Contour drains per 30 metres. Contour banking, ridging or terracing per ha. Pasture establishment per ha.

15

30 000.00

25

20 000.00

50

25 000.00

100

70.00

100

370.00

50

2000.00

Multipurpose boats.

10

5000.00

50

20 000.00

Tree crops

Aquaculture ponds. Citrus establishment per ha.

Forestry

Cocoa/coffee rehabilitation per ha. Watershed rehabilitation. Nature trails per km.

20

2000.00

-

2000.00

50

2500.00

15

500.00

Table 6.4 Examples of subsidies.

The purpose of price supports and subsidies The main functions of price supports and subsidies are to: • speed up the growth of agricultural output • stabilise agricultural production, market prices and farm incomes • increase the local market supply of commodities for home consumption and export • speed up or encourage growth in the output of specific commodities • provide a more regular income for farmers and producers. In addition, these incentives enable the government to achieve its targets in agriculture and to speed up innovation in farming.

• Capital is a factor of production that is made up of fixed (or durable) capital and working (or operating) capital. • Fixed capital refers to land, buildings, machinery and equipment that do not have to be purchased every year. • Working capital refers to the items which are needed for the day-to-day running of the farm. • Capital plays a fundamental role in agricultural production. It enables the farmer to plan, develop and operate the farm efficiently and profitably. • Caribbean farmers usually obtain capital (money) from their government, as well as from private financial institutions at varying rates of interest. • The government institutions include the Agricultural Development Bank and the Ministry of Agriculture. • Commercial banks and insurance companies charge higher rates of interest than the government institutions. • Credit unions and co-operatives also lend money to farmers. • Other sources of credit are moneylenders, friends and relatives.

76

6 Farm financing and support services

• 0 0 D

• • •

• • •

•

Farmers seeking loans from reputable financial institutions must fulfil certain requirements. They need to provide details of their farming experience, provide collateral and have a good credit rating. Many farmers find difficulty in obtaining agricultural credit due to lack of collateral, limited loans, high interest rates and a short repayment period. A co-operative is a business venture owned and operated by its members on a non-profit or cost basis for the economic well-being of its members. Some of the major principles of the co-operative concept include open membership, democratic control, patron-members, team management and non-profit business investments. Based on their function and affiliation, co-operatives may be grouped into various types, such as consumer, marketing, regional and federated. A co-operative helps its members reduce operating costs, increases their levels of production and helps them to become more competitive. Management of a co-operative is a shared responsibility which needs managerial ability, skills and experience. It must be goal-oriented, addressing problems proactively in a dynamic global environment. Price supports and subsidies instituted by government help to stabilise agricultural production, market prices and farm incomes.

1101

Capital includes land, money, buildings, machinery and equipment, fuel and raw materials which can be used in the production of crops and the rearing of livestock.

1102 Fixed capital is the land, buildings, machinery and equipment. Working

capital refers to items needed for the everyday running of the farm and which are used up in the production of goods, such as fuel, fertilisers, feed and seeds. ITQ3

Capital is necessary to buy land, farm inputs, employ modem technology, generate income and profits, develop and improve the business and increase assets.

ITN Any five from: Agricultural Development Bank, Ministry of Agriculture,

credit unions, co-operatives, Sou-Sou groups, moneylenders, relatives, friends, personal savings. 1105 The Agricultural Development Bank makes loans at low interest rates

to farmers. The Ministry of Agriculture subsidises farm inputs such as machinery and breeding stock. It also leases land to farmers. ITQ6 Four requirements from: registration, credit-worthiness, farm proposal,

budget estimate, farm records and experience, collateral, credit rating and character. ITQ7 The farm proposal contains details of the objectives, the farming

techniques to be used, the essential resources needed and the anticipated output and income. 1108 High interest loans mean that it is expensive to borrow the money, and

the farmer may not be able to generate enough income to repay the loan in the time period allowed. MN A good credit-rating means that the applicant has borrowed money

before and repaid the loan promptly. This means that the financial institution knows that this farmer is likely to submit a sensible proposal, be successful and repay the loan on time. 11010 Credit supervision means that regular visits are made to the farmer to

observe the progress of the enterprise and ensure that the money is being spent wisely. Technical advice can also be given.

77

Section A: The Business of Farming

11011 A co-operative is an organisation which is voluntarily and collectively owned, controlled, operated, patronised and managed by its members on a non-profit basis for their economic benefit. 11012 Any three from Table 6.2, such as produce, consumer, marketing, processing and service, or reference to local, regional, national and independent. 11013 The major principles of co-operatives are: open membership, joint ownership, democratic control, team management, patron-members, non-profit business and service investments. 11014 The problems of managing co-operatives are limited capital, business volume, membership issues, local competition and global issues. 11015 A price support is a minimum, or guaranteed, price for selected crops or commodities. A subsidy is financial assistance towards the cost of purchasing farm machinery or other farm inputs. 11016 Speed up the growth of agricultural output; stabilise production, prices and farm income; increase the supply of goods for home consumption and for export; provide a regular income for farmers and producers.

Examination-style questions

Multiple Choice Questions 1. Which of the following is NOT considered to be part of the working capital on a farm? A cost of feed B farm machinery C fuel D labourer's pay 2. Which of the following financial institutions offers loans at the highest rate of interest? A Agricultural Development Bank B credit unions C agricultural societies D commercial banks 3. A subsidy is an incentive to farmers in the form of: A a guaranteed price for citrus fruit exports B financial assistance for irrigation equipment C set minimum prices for milk and eggs D tax exemption 4. The function of a commodity co-operative is to: A purchase raw materials in bulk for its members B collect, grade, package and sell the produce of its members C process and manufacture farm products D focus on producing one product 5. A regional co-operative: A is not affiliated to any other co-operative B consists of several small co-operatives C has representatives from smaller co-operatives D sends representatives to smaller co-operatives

Short answer and essay-type questions 6. (a) Explain the meaning of 'capital' as it relates to agriculture. (b) Listing TWO examples of each, differentiate between: (i) fixed or durable capital, and (ii) operating or working capital. (c) Why does a farmer have to eventually replace or upgrade fixed or durable capital? 78

6 Farm financing and support services

7. (a) List FIVE sources from which farmers may obtain agricultural credit (finance). (b) Explain why most farmers prefer to borrow capital (money) from government institutions. 8. (a) With reference to agricultural loans for farmers, explain the meaning of: (i) collateral, and (ii) guarantor. (b) State the importance of 'collateral'. (c) What is the role of a 'guarantor'? 9. (a) In procuring agricultural credit, farmers may encounter several problems: (i) List FIVE main problems which farmers may encounter, and (ii) Discuss any THREE of the problems you have listed. 10. (a) List FIVE major roles for which co-operatives may be designed and organised. (b) Explain the importance of co-operatives in local agricultural development. 11. (a) List FIVE problems which may arise as challenges for the management team of a co-operative. (b) Discuss the procedures for managing any TWO of the problems you have listed. 12. (a) Using examples, explain the difference between (i) 'price support', and (ii) 'subsidy'. (b) Explain why subsidies and price support policies are instituted by government.

79

a.

f81ifi

organisation

and

planning

By the end of ,/ understand the need for record-keeping on a farm this chapter ,/ prepare different types of farm records you should be 3 distinguish between gross farm income and net farm income, gross margin able to: and net profit 3 use farm records on income and expenditure to determine profitability 3 prepare a partial and a complete budget 3 understand the relationship between budgeting and decision making.

Concept map

Farm organisation and planning

Income and expenditure

Farm records

Crop production

Gross income

Consumables, e.g. chemicals

Net income Gross margin

Livestock production

Net profit

Farm inventory

Value of outputs

Financial

Fixed costs and variable costs

Labour

80

Planning

Relationship between budgeting and decision making

7 Farm organisation and planning

7.1 Farm management and farm records Farm management is essential to agriculture because agricultural enterprises by themselves do not guarantee profitability. Farm resources need to be organised farm planning ► and managed and the starting point of this is farm planning. The plans outline the intentions of the farmer regarding the use of resources, the enterprise to be pursued and the anticipated production. There are four questions to be answered before starting on any new agricultural enterprise. These are: • What to produce? • Why choose the product? • How much to produce? • How to achieve the production?

List the FOUR key questions that a farmer should ask before planning a new enterprise.

What are the advantages of farm planning?

1I

short-term planning ►

long-term planning ►

What are the differences between short-term planning and long-term planning?

The choice of product is determined by factors such as the location of the farm, the experience of the farmer, the demand and market price of the commodity, and the resources available. A detailed farm plan, taking into consideration the answers to the key questions, eliminates some uncertainty. It also enables the farmer to apply for a loan from a reputable financial institution. If progress of the planned enterprise is recorded on a regular basis, there is information available for future use. Farm planning may be carried out on a short-term or a long-term basis. Shortterm planning relates to planning for enterprises for 1 year or for those with a short production cycle. The main objective is to make as much profit as possible, so the farmer chooses crops and livestock which will provide income in a few weeks or months on a continuing basis. Such enterprises could be vegetable production (pak choi, tomatoes and beans) or poultry production (broilers, ducks). Long-term planning refers to planning for periods of longer than 1 year. Usually plans are made for enterprises that need some time (1-3 years) to become established before production begins. Examples are tree crops (citrus, mango, avocado) and dairy farming (heifers and cows for milk production). The objective of long-term planning is to develop and expand resources on the farm so that the earning capacity and asset value of the farm will increase in the future. If a farmer is considering an enterprise requiring a long-term plan, then it is advisable to undertake one or two short-term enterprises to produce some income until the long-term projects become productive.

Figure 7.1 Poultry farming - a short-

term enterprise.

Figure 7.2 Growing citrus trees — a long-term enterprise.

81

Section A: The Business of Farming

Farm records farm records ► for prompt follow-up action

accessed or retrieved easily easily done and kept

kept consistently GOOD FARM RECORDS

for a definite purpose

essential information

simple, useful, effective

accurate, complete

Figure 7.3 The characteristics of good

farm records. t

List FOUR characteristics

of

good farm records.

Farm records detail essential data about agricultural enterprises, and the farm as a whole, in written or electronic form. The data should include records of transactions, facts, information and observations. While a farmer may remember some of the transactions carried out on a day-to-day basis, it is not possible to remember details of figures, quantities and dates so it is vital to keep written records. The different types of farm records are summarised in Table 7.1. Farm records should: • be easy to do and keep • serve a definite purpose • be simple, useful and effective • be accurate and complete, giving the essential information • be kept consistently • be easily accessible. Type of record Inventory Production Financial Labour Consumables

Examples Land, machinery, tools and equipment, buildings, livestock, field crops. Crops, livestock, breeding, milk production, egg production, feed conversion ratios. Profit and loss account, assets, liabilities, balance sheet. Personnel, permanent, casual, seasonal, contract, family. Seed, fertilisers, pesticides, feed, medication, fuel.

Table 7.1 Types of farm records.

Farm inventory farm inventory ► A farm inventory is a record of the farm resources, in terms of quantity and value, at the beginning and end of an accounting period (normally one calendar year). It includes land, machinery, tools and equipment, buildings, livestock, field crops and materials. Inventory records may be done collectively or separately for each of the resources, such as land, machinery and buildings. Farmers with large farms prefer separate inventories for each resource because it is easier to show continuity on a yearly basis. The information on each resource can be found more readily and necessary action can be taken more promptly. An example of a separate inventory system for tools and equipment is shown in Figure 7.4.

I

tool/equipment Garden fork — heavy _ . Carden fork —light Trenching spade Weeding hoe Brushing cutlass Straight cutlass . Watering can Knapsack sprayer Hayfork Weed watker TOTAL

4 2 3 6 5 6 3 2 2 1

Ja. 01, 2007 480.00 480.00 150.00 270.00 360.00 300.00 330.00 240.00 480.00 160.00 2400.00 5170.00

Dec. 31, 2007 420.00 Damaged haedlu i.1w. Very good coilifies 140.00 Good condition 240.00 Broken handles in three 300.00 Two need replacing 200.00 Broken handles in two 270.00 Two need repairing 180.00 Need servicing 400.00 120.00 Very good condition 2000.00 Exeell etl condition 4370.00

Figure 7.4 An inventory of tools and equipment.

Production records production records ► Production records are used for crop and livestock enterprises to follow the prof and determine the performance and productivity of different crop varieties breeds of animals. With such records, farmers can find out whether inputs, 82

7 • Farm organisation and planning

as feed and fertiliser, are being used efficiently. This will ensure that high yield and profitability are obtained on a consistent basis. For example, livestock records can be kept to show the milk production of individual cows or the feed conversion ratio (FCR) when a particular type of feed is used for fattening weaners. Similarly, there are record forms for egg production and other types of livestock enterprises, such as rabbit and broiler production.

Records for rabbit production As an example, records for rabbit production should include: • an animal inventory to include total number of bucks, does and weavers • breeding records for each buck and doe with breeding dates, including number in each litter of each doe, number of live births and mortality, and remarks (e.g. whether the doe was a good mother) • feeding records, to include feed given, feeding regime, growth rate and feed conversion ratios • medication records • weight at marketing or slaughter, cost of production and income from sale. From the records, a farmer can work out whether the enterprise makes a profit or a loss. They also highlight problems where savings or improvements can be made to make the enterprise more profitable in the long term. In assessing the enterprise, the farmer also needs to take into account the cost of the buildings and the labour.

Records for crops Crop production record forms show the performance of the crop variety, the yield and how much profit (or loss) was made. An example of a record form for a crop of lettuce is shown in Figure 7.5. Crop:

Variety:

Lettuce

Amt, planted or hectarage:

Iceberg

InputsAtems — — Land preparation

3000

1 -- ^

Planting date:

heads

Type • bruehcut

• plough

04/06/2010

Quantity N/A

Cost ($)

Harvesting date or period: 1 9 — 23/07/2010

Remarks

120.00

Hired contract Iubour

750.00

Prerided ere truepe rt

• retavate

20 Spedliy trryo

Planting material

•

Fertilisers

• area • Netree

50 kg 2 kg

350.00 90.00

Pesticides

• Meldhion • Cuynoit

0.51 0.5 kg

95.00 85.00

seedlings

Miscellaneous Labour

Total cost of production

Yield/Output Gross income Profit/(Loss)

Figure 7.5 A record form for iceberg lettuce.

Chemical treatment record Any treatment given to crops or livestock is a consumable resource, and needs chemical treatments ► to be offset against any profit made. Chemical treatments include fertilisers and

83

Section A: The Business of Farming

pesticides for crops and medication, and concentrates and drugs for livestock. Figure 7.6 shows a record form for the use of fertiliser. In the 'Remarks' column, the farmer should record the crop to which fertiliser is applied. This is crossreferenced on the crop production record and the cost is offset against the profit from sale of the crop. Consumable item: Fertiliser — Urea Utilisation

Purchases Date

Quantity purchased

Cost

Date

Quantity used

Quantity in stock

Balance

Remarks

List FOUR main types of farm records.

Describe the uses of production records.

7.2 Income and expenditure income ► In small agricultural enterprises, financial records may take the form of income expenditure ► (farm receipts) and expenditure (farm expenses). Using these, a farmer will determine his profit or loss. In larger businesses, the financial records include: • the profit and loss account (referred to as the cash account) • the assets of the farm • the liabilities of the farm • the net worth statement or balance sheet.

Profit and loss account profit and loss account ►

Figure 7.7 shows a profit and loss account for one month. The income is on the lefthand side and gives details of produce sold and price achieved. The expenditure is on the right-hand side and includes labour, fuel and other consumables. The only details missing from this account are the quantities of produce sold and the consumables used. These would appear on the records for each enterprise on the [arm. Dr.

Particulars

Date

Expenses (Expenditure)

Cr.

Receipts (Income) Value ($)

Particulars

Date

Value ($)

July 02 .

Cabbage

450.00

July 01

Labour

450.00

July 08

Bodi boons

210.00

July 05

Seedliugs

180.00

July 12

Eggs

320.00

July 09

Fertiliser

120.00

July 16

C..........

150.00

July 15

luseetieide

July 21

I'd Choi

120.00

July 23

Full

160.00

July 26

Eggs

300.00

July 28

Fuel: Pick-up

150.00

July 30

Nitro

140.00

July 31

Electricity

110.00

Teal

1690.00

total

90.00

1260.00

Figure 7.7 A profit and loss account for July. balance sheet ► The balance sheet, or net worth statement, shows the value of assets left for the farmer after all claims and liabilities against the business have been paid. net worth = assets — liabilities

84

7 • Farm organisation and planning

A balance sheet is shown in Figure 7.8. The assets include the land, buildings, machinery and equipment, field crops, livestock and cash. The liabilities include unpaid rent and wages, mortgage commitment and money owing to creditors. Assets

Value ($)

Liabilities

Land

125000.00

Wages

Buildings

60000.00

Rent

Machinery and Equipment

45000.00

Mortgage

Field crops

10000.00

Creditors

Livestock

15000.00

Total liabilities

50000.00

Net worth

Cash Total assets

Value ($) 28000.00 1200.00 65000.00 35000.00 129200.00 175800.00

305000.00

304200.00

Figure 7.8 Balance sheet (net worth statement).

Income income ► Income is money earned by producing commodities which are in demand and selling them at current market prices to wholesalers, retailers and consumers. After subtracting the costs of production, the farmer uses the income to purchase necessities for the family, educate children, invest in savings, and buy the inputs required to continue the farm operations. In determining income, several factors have to be considered: • fixed inputs and fixed costs (total fixed cost) • variable inputs and variable costs (total variable cost) • output and the market price gained (total income).

Production records production record ► Figure 7.9 shows a production record for a duck rearing enterprise, where all the costs are set out and the total income shown. Fixed Inputs

Land rental Building depreciation Equipment depreciation Vehicle depreciation Insurance Loan interest Total Fixed Costs (T.EC.)

Fixed Costs ($)

60.00 500.00

Variable Inputs

Muscovy ducklings Feed

250.00 900.00 550.00 240.00 = 2500.00

Medication Labour

Variable Costs ($) 6000.00 15000.00 500.00 12000.00

Electricity

550.00

Gasoline (Fuel)

850.00

Maintenance

600.00

Total Variable Costs (T.V.C.)

= 35 500.00

OutpuWeld & Market Price

Income ($)

1500 live ducks at 5 kg each (avg wt) 7500 kg at $12.00 per kg (Wholesale market price)

7500 kg r $12.00 _ $90000.00

Total Income

= 90 000.00

Figure 7.9 A duck production record.

From Figure 7.9, you can see that the total income is the market price multiplied gross income ► by the number of ducks sold. This is $90 000 and represents the gross income, that is the income regardless of the cost of the inputs. gross income =total income net income ► The net income is the gross income minus the total cost of the inputs (the total fixed cost plus the total variable costs). In this case, the net income is $52 000 because the total cost of the inputs is $35 500 plus $2500 (this equals $38 000). So $90 000 minus $38 000 = $52 000.

85

Section A: The Business of Farming

Explain the meaning of the terms farm income, gross income and net income.

gross margin ► net profit ►

How does the farmer use the income from the

farm?

Practical activity: Use examples of farm records provided by your teacher to determine whether or not an agricultural enterprise is profitable.

Having seen how net income is worked out for one agricultural enterprise, it is easy to see how gross farm income and net farm income can be calculated. The farmer needs to add up the gross income from all the enterprises, add up the total cost of the fixed and variable inputs, and use these figures to calculate a net farm income. Two other terms often used in connection with balance sheets are gross margin and net profit. Gross margin is equal to gross income minus variable costs. It is the difference between the sales and the production costs. gross margin = gross income - variable costs Gross margin is an indication of how profitable an enterprise is. Those agricultural businesses with higher gross margins will have more money left over to spend on other operations. Net profit is a measure of profit over time and it is calculated by subtracting all the costs of a business from the receipts. This means subtracting all the costs from the gross profit. Net profit can be shown on the profit and loss account for a business.

7.3 Partial and complete budgets complete budget ►

A complete budget is also known as a total budget or a whole farm budget. It is prepared for a farm which has a new owner or new management. It can also be used when there is a major change in the resources and enterprises of a farm, or when a complete re-organisation is undertaken. It is usually prepared when an existing farm wants to change its systems of production and introduce improved technology (see Figure 7.10). A Cawiplale Be4gat _Ilatile _ Pak el isi _1000 btaikait$3.00Audla 1500 kg 0 no 00/4 - Sweet poplar_ Broilere 4000 kg @ AP-00AI _JAW Income 1T.1.1 lifirdralle expenses_ WO __Seedlings ....... ___ „ Fertiliser Pesticidal _toiler eltidt F et. alleatiew thalriallt Wear I rangwdatlea latai filial. algoiiiiittil a

fi

am - Yate

ienses 0.0

22450M_

270.00

1200.00

750.00 1 500.00

-

Tsesaiiikva vaill114Telposses

_

36 000.00 _54_010.0. 1500.s00 2 500.00 1 200.00 3 000.00 600.00 450.00 550.00 6 500.00 750.0

as interest lissraeee -Di Lreeiatiee Tatar e_W sapaasse LT.F.Ej. Ti,. -

------- $ 3 000.00

15 000.00

3725.00

= T.T. =1.-TE. = $54 000.00 - 322650.00 = 31350.0

is

Teter expestas [LEI

= T.Y.F. + T.F.E. = $22 650.00 + $3 725.00 = $26 375.00

NM

= Tatar ieve s IT.T.Flifil an 00000 (T.11 = f54 000.00 - $26 375.00 = $27 625.00

Figure 7.10 A complete budget for a mixed farm. partial budget ►

86

A partial budget is prepared when there is change in a specific aspect of the existing farm plan that requires some modification to the budget. For example, a farmer may decide to rear 6000 broiler birds instead of 4000, or purchase a pick-up truck

7 • Farm organisation and planning

What is meant by the term budgeting?

I

I

When is it necessa ry to prepare a complete budget?

Describe the impo rt ant features of a pa rt ial

instead of hiring transportation. In such situations, most of the income (receipts) and expenses (costs) in the existing budget will remain the same and only some will change. A partial budget identifies the income and expenses that will change, and sets out how additional costs and income will affect the change in profit. The financial gains and losses are set out in the partial budget as: • debits: additional costs and reduced income • credits: additional income and reduced costs. A Partial Budget r)taya • Beatie8.1.i00_k reiler birl: ieote^ajlOQQbitds^_— __ i11 enta . costs Broiierckickt __

11111111 Variable

• •

_ Feed

_ _

FieJ cub. .... • None

Practical activity: Prepare complete budgets for some broiler and crop production projects. Using the example given here, prepare a partial budget for an increase in the number of broilers reared from 4000 to 6000.

Total cuts:

_

__

iNe aTia ^^__

• 2000 k btsi en

1500.0

a1.00k,

3 000.00

• R eieetie.325. 00

budget.

_.._ - —

— + F.^.

NIL

Reduced_---------tiasi • None

_

_25. —482 5.00

NIL

^ 825. 00

i'ia^ is ra# TotTcre r ehd. it _.._ -__ IS 000 00— 4 825.0 0 1311500

1800000___

825.00

NIL

-r.4 1 hVit

1800000

R^IroTath— • Ntwe

NIL

-

A 11 en1--

--

NIL

is o00:o0 ----

Figure 7.11 A partial budget for an increase in broiler production.

7.4 The relationship between budgeting and decision-making Decision-making

decision-making ►

identify problem

Decision-making is the ability to make sound, objective judgements and initiate followgather information (data) up action, based on all data and information available. It is also the process of identifying, analyse data analysing and selecting the right course of action to solve a problem. formulate alternatives or solutions All farmers and entrepreneurs involved in farming are required to make decisions about farm assess each alternative/solution plans, budgets, work schedules, modifications and improvements. Sound decision-making results in farm profitability and development of select the best alternative/solution the business. Decision-making (see Figure 7.12) is not a evaluate the chosen alternative solution simple matter for farmers. They have to consider limited resources, changing weather, the accept responsibility and results unpredictable nature of production, the ups and downs of the market and natural disasters. Hasty Figure 7.12 The process of decision-making can bring economic losses and solving a problem by decisionbankruptcy. making.

Budgeting budgeting ► Budgeting is estimating the quantity of inputs, costs, outputs, income and profit related to an agricultural enterprise. It focuses on the physical components (what to produce, how to produce it and how much to produce) and the financial components (anticipated costs, returns and profit). Budgeting is an essential process in farm planning.

87

Section A: The Business of Farming

Reasons for budgeting List FOUR factors which affect decision-making by farmers in the Caribbean.

State TWO beneficial effects of sound decisionmaking.

How does budgeting help a farmer with decisionmaking?

• It helps the farmer to decide which farm plan or agricultural enterprise to choose. • It allows the farmer to compare the profitability of different enterprises. • It makes the preparation of whole farm budgets easier. • It provides documentary evidence for financial institutions when a loan application is made. • It makes it easier for the farmer to control the finances of the farm.

4=1;')

Farm planning is essential for the proper use of resources and the development of agricultural enterprises. • Farm planning may be short-term for enterprises taking less than a year or for those that can be completed in a short production cycle. • Long-term planning involves enterprises which take from 1 to 3 years to come into full production. • Farm record-keeping is the process of registering essential data of agricultural enterprises. • Farm records provide valuable information for farm planning, decision-making and budgeting. They are classified into: inventory, production, financial, labour and consumables. • Gross farm income refers to the total income from all the farm enterprises. • The net income is the gross income minus the total costs of the inputs. • Budgeting is estimating the quantity of inputs, costs, outputs, income and profit of a farm plan. • A complete budget, sometimes known as a whole farm budget or total budget, is usually drawn up when a farm has a new owner or is under new management. It consists of all the assets and liabilities. • A partial budget is drawn up when there is a proposed change in the nature of an agricultural enterprise, e.g. increasing the number of livestock. • Decision-making in agriculture is the process of identifying, analysing and selecting a course of action to solve a problem. • Sound decision-making results in farm profitability and development of agricultural business. •

1T01

ITU

1103

ITN

1TC)5

11116

88

What to produce? Why choose the product? How much to produce? How to achieve the production? Farm planning removes uncertainty, organises the use of farm resources, focuses on production and enables the farmer to apply for a loan. Short-term planning is for projects which last for a year or less, for crops and for rearing livestock with a short production cycle. Long-term planning is for projects lasting from 1 to 3 years. Four from: easy to do and keep; serve a definite purpose; simple, useful and effective; be accurate and complete; be kept consistently; be easily accessible. Four from: farm inventory; production; breeding; financial; labour; consumables. Production records are used to follow the progress, determine the performance and productivity of different crop varieties and breeds of animals.

7 - Farm organisation and planning

1107 Farm income is earned by producing and selling commodities. Gross income is the total income gained by selling the product. Net income is the gross income minus the total costs of the inputs. IT08 The income from the farm is used to purchase the necessities for the family, educate the children, invest in savings and buy the inputs for continuation of the farm business. 1109 Budgeting is the process of estimating the total quantity of inputs, costs, outputs, income and profits for an enterprise. 11010 A complete budget is prepared when a farm has a new owner or when it is under new management. It can be prepared when an existing farm is completely re-organised. 11011 The important features of a partial budget are the additional costs and reduced income and the additional income and reduced costs. 11012 Decision-making in the Caribbean is affected by limited resources, changing weather conditions, natural disaster, changing markets and the unpredictable nature of production. 11013 Choosing the right course of action in solving a problem, farm profitability and development of the business. 11014 It helps the farmer to decide which enterprise to choose in order to be profitable.

Examination-style questions

Multiple Choice Questions 1. Long-term planning is used for the production of: A broilers B milk C lettuces D tomatoes 2. Which type of farm records are used for recording the amounts of fertiliser used? A inventory B production C financial D consumables 3. A farming enterprise recorded that the income from the sale of broilers was $80 000. The fixed costs were $2500 and the variable costs were $26 000. The farm profit was: A $80 000 + $2500 B $80 000—$2500 C $80 000 — $28 500 D $80 000 — $26 500 4. Gross margin is: A gross income — variable costs B gross income — fixed costs C gross income — total costs D gross income — net income 5. Variable costs change with: A the market price B the depreciation of the machinery C the level of production D the rent of the land

89

Section A: The Business of Farming

Short answer and essay-type questions 6. Discuss the statement 'decision-making is regarded as the heart of

farming'. 7. (a) Draw a diagram to show the stages in the process of decision-making

that farmers are advised to adopt. (b) Describe TWO beneficial effects of sound decision-making. 8. (a) Using examples, differentiate between: (i) short-term planning, and (ii) long-term planning. (b) State the major objective of: (i) short-term planning, and (ii) long-term planning. (c) Why should farmers include one or two short-term farm enterprises in long-term agricultural projects? 9. (a) Explain the meaning of 'budgeting' in relation to farming. (b) State the importance of 'budgeting' in agriculture. (c) Differentiate between (i) a complete budget, and (ii) a partial budget. 10. (a) Differentiate between (i) a farm plan, and (ii) a farm budget. (b) Explain why it is important for the farmer to prepare both a farm plan and a farm budget. 11. (a) Explain the meaning of the term: 'farm record-keeping'. (b) What are FIVE major characteristics of good farm records? (c) State FIVE advantages of farm record-keeping. 12. (a) List THREE major kinds of financial records which farmers pursuing large-scale agribusinesses should keep. (b) Differentiate between (i) assets, and (ii) liabilities. (c) State the importance of financial records.

90

(11111111U1u,uunIur"

Soil

By the end of this chapter you should be able to:

3 V / 3 3 3 3 3 3 3 3 3 3 3

Concept map

feItIIIt V

describe the process of soil formation know what a soil profile is and describe the major soil horizons describe the major components of soil describe the physical and chemical properties of major soil types understand how major elements are recycled in nature explain the factors affecting soil fertility state the importance of the minor nutrients to crop production interpret fertiliser ratios explain how soil fertility can be maintained describe how composting is carried out define soil erosion distinguish between different types of soil erosion explain the causes of soil erosion explain how soil and water can be conserved.

Soil fertility physical chemical volcanic activity animals and plants human activities soil organisms

Soil profile

lajor soil horizons: characteristics

Soil types

lajor soil types: sand clay loam

Soil properties

soil

Soil and soil fertility

Soil

Soil formation

and

•••••

Recycling of elements

Factors affecting soil fertility

nutrients pH

texture structure aeration porosity organic matter mineral matter soil temperature soil water

Maintaining soil fertility

I

Soil erosion

Role of microorganisms: carbon cycle nitrogen cycle

Terracing Cropping systems Weirs, drains, ponds, tanks

Climate Biotic Topographic Parent material Management I mportance of minor nutrients Amendments: lime NPK organic manures Cropping systems •Composting

Soil and water conservation

Types water wind land clearing poor land management

animal activities

Land management: cover cropping irrigation and drainage

tillage

91

►t

Section B: Crop Production

8.1 Soil formation weathering ►

bedrock ►

Soil on the Earth is like the skin on a mango, except that soil varies in composition, type and thickness at different places. Soil is formed by the weathering of rocks. Weathering is the decomposition of Earth's rocks through direct contact with the planet's atmosphere. Soil may be found overlying these rocks or it may be transported by natural forces, such as water, wind and glacial action, and deposited at other sites. Soil is a mixture of mineral particles, organic material, air and water. It provides an environment for the growth of plants as well as a habitat for vast numbers of soil organisms. Weathering involves the breakdown of bedrock (unweathered rock) into smaller and smaller particles, together with the activities of plants, animals and humans. The type of soil formed depends on the parent material, or bedrock. Where the parent material is shale, then a clay soil is produced. Where the parent material is sandstone then sandy soils result. Soils formed in sloping or mountainous areas are shallow due to erosion, usually by water. If there is a good vegetative cover with organic matter as a top layer, then soil will form even on hillsides. But if there is erosion, then soil development occurs only in the foot-hills and valleys with very little soil formed in higher regions. There are three forms of weathering: mechanical (or physical), chemical and biological.

Mechanical (or physical) weathering Weathering due to ice physical weathering ►

Physical weathering is the breakdown of rocks by mechanical means. If forces arc applied to rock, either within the rock or from an external source, then the rock breaks down. The most important type of physical weathering is brought about by frost. In areas where the temperature falls below 0 °C, any water that has filtered down into the cracks in the rock will freeze. As water freezes it expands and takes up a larger space, exerting pressure and causing the cracks to get bigger. When the temperature rises, the ice melts and the larger crack can hold more water. When the temperature drops again, there will be more ice formed, yet more pressure and the crack will get deeper. Eventually this process will break up rock into smaller fragments. After rain or snow melting

water

joint

(

On freezing, the water expands, forcing the joints apart ice

The ice melts and eventually the rock is broken up

Ego

rock

Figure 8.1 Freeze-thaw weathering.

Weathering due to moving water Water in streams dislodges and carries away rock fragments. These collid disintegrate and get worn down into small rounded pebbles and eventually miner particles. Heavy rain also dislodges rock fragments and washes them into rivers. 1 coastal areas, waves beat on rocks causing them to disintegrate.

I

Weathering due to wind In very dry regions, wind containing sand particles has an abrasive action at wears away the surfaces of rocks. The particles of rock can be carried to other sit • where they are deposited.

92

8 Soil and soil fertility

Glaciers Glaciers can cause weathering as they move down mountain slopes. They erode rocks, transporting and depositing materials many kilometres away on lower ground.

Weathering due to the sun In the daytime, the sun heats up the surface of rocks causing them to expand. At night, when temperatures drop, rock cools and contracts. Over a long period, the continued expansion and contraction of the rock will cause it to fragment. This is due to stresses set up as the surface expands more than the centre of the rock, causing the surface layers to break away.

Chemical weathering chemical weathering ► Chemical weathering is weathering which alters the chemical nature of the rock. The main factors which cause chemical weathering are water, oxygen and carbon dioxide.

Water Rocks are made of materials which have different levels of solubility. For example, sodium chloride (common salt) is soluble and is only found as a solid (rock salt) in very dry areas. Other rocks which are soluble, but less so, include gypsum (calcium sulphate) and carbonates, e.g. calcium carbonate. Silica, a component of sand, is only slightly soluble in water. Water can change the minerals in rocks. If water is added to some soil minerals it causes chemical changes and new minerals are formed. For example, potassium may be removed from the rock known as feldspar, leaving aluminium and silicon. These can then re-crystallise forming clay.

Oxygen and carbon dioxide oxidation ► Oxidation occurs when minerals in rock combine with atmospheric oxygen or the oxygen dissolved in rainwater. The minerals are converted to oxides which are more likely to break down or undergo weathering. For example, when water combines with the iron-containing rock, olivine, ferrous oxide is released. The ferrous oxide becomes oxidised by oxygen in the atmosphere to ferric oxide, known as haematite. When carbon dioxide in air dissolves in rainwater, carbonic acid is formed. This is a weak inorganic acid. As rainwater filters through rock containing carbonate, such as limestone, the minerals in the rock dissolve and the rock breaks up. In Write a definition for the term 'weathering'. I most humid regions, other dilute inorganic acids (such as nitric and sulphuric), and some organic acids are also important in weathering rocks. rr

List the different types of weathering.

Biological weathering

biological weathering ► Biological weathering refers to disintegration of rocks and the formation of soil through the activities of living organisms. If there are cracks in a rock, some soil will gather. If a seed germinates in this soil, its growing roots exert pressure and eventually the rock splits. Animals which What are the effects of rainwater on carbonate tunnel into the soil, such as worms, ants and moles, contribute to weathering by rocks? bringing new material to the surface where it is exposed to rainwater and the r ' atmosphere. Describe how physical weathering occurs. I Plants rot and are decomposed by micro-organisms in the soil. In this process organic acids, called humic acids, are released into the soil and break down rock minerals. The plant roots also release carbon dioxide into the soil and carbon How do plant roots contribute to weathering? I dioxide breaks down carbonates (see above).

93

Section B: Crop Production

Volcanic activity and soil formation Volcanic activity has occurred in several Caribbean islands, giving rise to igneous rocks and volcanic soils. Volcanic soils are found on Grenada, St Vincent, St Lucia, Dominica and Montserrat. The soil on slopes and in the valleys of the volcanic cones is derived from the lava thrown out when an eruption occurs. Volcanic soils are dark grey and have a granular structure. They are porous and high in sulphur, phosphorus and potassium. At the time of an eruption, volcanic ash is dispersed by volcanic pressure and by the wind. It settles on the soil, where it appears as a fluffy, greyish layer. In the years following an eruption, it becomes incorporated into the topsoil by weathering and cultivation by farmers. It is not easy to see decomposed organic matter in such soils because of their colour.

Organic matter organic matter ►

micro-organisms, humus ►

Organic matter consists of the dead and decaying remains of plants and animals. The accumulation of organic matter on the soil surface protects it from erosion and encourages soil formation. Organic matter provides a source of energy for micro-organisms which help to form humus. Humus is a brown or black substance formed from decayed, and partially decayed, plant and animal material. Humus is important as it: • helps to bind sand and clay particles into clumps producing a granular soil (it i mproves the texture) • contains some of the nutrients which plants need.

Effects of soil organisms on soil

Figure 8.2 Earthworms in the soil.

List FOUR factors which affect soil formation.

Practical activities: 1. Make a poster to show how certain soil types are associated with their parent material. 2. Make a collection of soils formed from different soil-forming activities. Examine the soils, noting their characteristics. Suggested types are: volcanic soil, a good agricultural soil, a soil that has been chemically weathered (a limestone soil), and soils that still show evidence of physical weathering.

94

Soil micro-organisms, such as bacteria and fungi, break down organic matter to humus. Earthworms (see Figure 8.2) contribute to soil formation and soil fertility because they: • make tunnels allowing air down into the soil • create tunnels which contribute to the drainage of the soil • make their tunnels by swallowing soil, so that the organic matter is digested and mineral particles pass out of the gut back into the soil. In some species, egested soil is deposited on the surface as a 'worm cast' and consists of finely ground particles. The effect is to mix up layers of soil. • pull leaves into their tunnels for food, increasing the organic content of the soil and contributing to mixing. Other burrowing organisms, such as insects, insect larvae, slugs, spiders and woodlice, keep soil loose and aerated. Their faeces contribute to the organic matter and provide food for micro-organisms. Plant roots bind soil particles together and also create channels for the cycling of nutrients within the soil.

Effect of human activities on soil Several human activities affect the formation and fertility of soil: • land clearing interrupts the accumulation of organic matter • grading and levelling of land removes the topsoil and often sub-surface layers as well • mining, quarrying and soil removal upset the activity of soil-organisms and soil formation • ploughing disturbs soil profiles but it does break up rock fragments.

8 Soil and soil fertility

8.2 The soil profile soil profile ► A soil profile is a vertical section dug down through the soil showing a natural sequence of horizontal layers of soil. It can be revealed by digging a rectangular pit so that one wall of the pit exposes the colours and textures of the different layers. Alternatively, a soil auger can be used to remove a core of soil and the different layers can be identified. Figure 8.3 shows a soil auger in use.

Soil horizons soil horizon ► Each layer, or soil horizon, has different physical and chemical properties. The development of a soil profile is affected by the topography of the land, soil texture, drainage and soil erosion. In a typical, undisturbed, well-drained forest soil, at least four major horizons can be recognised. Horizons are named 0, A and B and may contain one or more sub-horizons, which are named O„ O Z , A„ A 2 , A 3 and B„ B 2 , B3. samples are laid out on the ground in the order in which they are removed from the auger hole 1

2

3

4

5

6

Name of horizon O horizon Organic or litter layer A horizon Zone of leaching or eluviation B horizon Zone of accumulation or illuviation

Figure 8.3 Using an auger to obtain

soil samples.

C horizon Parent material

Characteristic features • formed on the surface • consists of plant and animal material at different stages of decomposition • consists of a mixture of humus and mineral soil • normally dark brown, dark grey or blackish in colour due to leaching of materials from the 0 horizon • usually lighter in colour than the A horizon • leached clay, iron and aluminium oxides, calcium carbonate, sulphates and other salts accumulate in this horizon • an impervious layer called 'hardpan' may develop • no biological activity or soil formation takes place • may or may not be the same material from which horizons A and B were formed

Table 8.1 Horizons and their characteristic features.

The importance of soil profiles

Draw a diagram to show a typical soil profile and label the different horizons. r: Explain which horizons are affected when the land is ploughed.

Practical activities: 1. Examine a soil profile and measure the depth of the different horizons. 2. Use a soil auger to determine the characteristics of a soil profile.

For the farmer, the soil profile is relevant in terms of land preparation needed before planting crops. During ploughing, the furrow slice or topsoil is cut and inverted by the plough-share. Depending on the thickness of horizons 0, A and B, this slice may include horizon 0 and part of horizon A, or horizon 0, horizon A and part of horizon B. The area beneath the furrow slice is referred to as the subsoil. If there is a hardpan or impervious layer, resulting from the accumulation and compaction of leached deposits, then the subsoil may need to be broken with a sub-soiler. furrow slice (topsoil)

subsoil

parent material 1

organic matter, leafmould, forest litter O1 02 f1 O t1 —A1 lIrI A { zone of leaching or eluviation ---------A3 )( —81 •-------- ------- B2 ( B zone of accumulation or illuviation: a hardpan may develop B3 I 1 C

1I

C j parent material: zone devoid of biological activities

Figure 8.4 A typical soil profile

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Section B: Crop Production

Depending on the soil profile, the farmer can decide on the depth of ploughing, selection of equipment for tillage, and the choice of crops (shallow-rooted or deeprooted).

Types of soils Latosols Most soils in the Caribbean are latosols ► latosols, formed when rainfall is greater than evaporation and there is rapid leaching of dissolved minerals. These soils support dense, tropical rainforest. The organic layer (0 horizon) of leaves and litter is usually less than 25 mm deep. Because of high temperatures and humidity, organic matter decomposes very quickly. The A horizon is 300 mm deep and a dark brown to reddish colour. The clay content makes the soil sticky.

Rainfall greater than evaporation

Little humus mixed with mineral matter

Rapid leaching

Strongly weathem Accumulation of organic matter, iron

Brownish yellow to brownish red

and aluminium

clay with B1

well-developed angular, blocky structure

Rendzina rendzina ►

Another type of soil in the Caribbean region is a rendzina, which develops over limestone rocks. This soil is thin, with the A horizon 200 to 250 mm deep. The soil is dark in colour due to the amount of humus and there is much animal activity. Although there are rendzinas in many Caribbean countries, they are not widespread. The best examples are on the plateaux of Jamaica.

Horizon enriched with cis

Hard pan (iron

iron, aluminium

pan where

and/or other

there is a high

compounds

concentration of iron)

Parent rock

Figure 8.5 Soil profile of a latosol.

8.3 The major components of soil Soil is made up of: • inorganic matter (mineral particles) • organic matter • water • air. The mineral particles and the organic matter (about 50%) are referred to as solids. The water and air, which make up the remaining 50%, are referred to as pore space. By volume, the solid fraction is made up of 45% mineral particles and 5% organic matter. The pore space fraction is divided into 25% water and 25% air, both of which vary according to weather conditions.

mineral matter

water

Figure 8.6 The major

components of soil.

Inorganic matter The mineral component of soil, derived from the weathering of rocks, is porous and consists of stones, gravel, sand, silt and clay. These components vary in size and composition as shown in Table 8.2.

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8 'Soil and soil fertility Component Stone and gravel remnants Sand

Size of particles Very coarse >2.0 mm Coarse sand 2.0-0.2 mm

Silt

Fine sand 0.2-0.02mm Fine 0.02-0.002 mm

Clay

Very fine