Explain the following terms used in agricultural production: (a) hired labour; (b) fixed capital; (c) working capital; (d) management.

Answer Details

(a) Hired labour

Hired labour refers to the workers engaged and paid wages or salaries by the farmer to perform farm operations. Such labourers are not members of the farmer family and may be employed on a permanent, casual or contract basis.

(b) Fixed capital

Fixed capital refers to the durable assets of the farm that are used again and again over a long period and are not used up in a single production cycle. Examples include land, farm buildings, tractors, machinery and farm implements.

(c) Working capital

Working capital (also called circulating or operating capital) refers to the assets that are used up within a single production cycle and must be replaced each season. Examples include seeds, fertilizers, agro-chemicals, feeds, fuel and cash for paying wages.

(d) Management

Management is the factor of production that involves organising, planning, coordinating and controlling the other factors of production (land, labour and capital) and taking decisions to achieve the farm objectives at a profit. The manager bears the risks and uncertainties of the farm business.