Agricultural Economics, Marketing and Extension Education
This domain tests farm costing, marketing channels and institutions, and the extension methods used to carry technology to farmers.
Costing terms
- Gross income = yield × price. Cost of cultivation includes variable and fixed costs - seed, fertilizer, labour, rent, depreciation and interest.
- Net income = gross income − cost of cultivation.
- B:C ratio = gross income ÷ cost of cultivation; above 1 means profit.
- Types of farming: specialised, diversified, mixed, ranching, dry farming.
Marketing and extension
- Functions: assembling, grading, storage, transport, processing, standardisation, financing, risk bearing.
- Channel: producer → village trader → commission agent (arhatiya) → wholesaler → retailer → consumer. Longer channels reduce the producer's share.
- Institutions: regulated mandi, e-NAM, FPO, cooperative marketing, NAFED; MSP and government procurement of wheat and paddy in UP.
- Extension methods: individual (farm and home visit, office call), group (method demonstration, result demonstration, field day, kisan mela), mass (radio, TV, newspaper, leaflet, SMS).
Worked example
A farmer spends ₹45,000 per ha on wheat, harvests 45 quintals and sells at ₹2,000/quintal. Gross income = 45 × 2,000 = ₹90,000; net income = ₹45,000; B:C = 90,000 ÷ 45,000 = 2.0; profit efficiency = 45,000 ÷ 90,000 × 100 = 50%. If the price falls to ₹1,600, gross income is ₹72,000 and B:C falls to 1.6 - still profitable, but the margin is thinner.
Traps that cost marks
- Reporting net income as the B:C ratio.
- Omitting fixed costs such as rent, depreciation and interest.
- Claiming a long marketing channel gives farmers a larger share.
- Calling a demonstration a mass-contact method; it is a group method.