(a (i) State the law of supply in relation to agricultural production. (ii) Give an example of supply schedule and draw the supply curve for a named agricul...

Answer Details

(a)(i) The law of supply in relation to agricultural production

The law of supply states that, all other factors remaining constant, the higher the price of an agricultural produce, the greater the quantity that producers are willing and able to offer for sale; and the lower the price, the smaller the quantity offered for sale. In other words, the quantity supplied of an agricultural produce varies directly (positively) with its price.

(a)(ii) Supply schedule and supply curve for maize

A supply schedule is a table showing the different quantities of a produce that farmers are willing to supply at different prices. The schedule below is for a named agricultural produce, maize (price in naira per basket):

When these points are plotted, with price on the vertical axis and quantity supplied on the horizontal axis, they give the supply curve below:

The supply curve SS slopes upward from left to right, confirming the law of supply: as the price of maize rises from \(\mathrm{N}4\) to \(\mathrm{N}10\), the quantity supplied rises from 20 to 80 baskets. The relationship is linear here, with a constant slope of \(\dfrac{10-4}{80-20}=\dfrac{6}{60}=0.1\) naira per basket, so every extra \(\mathrm{N}2\) in price calls forth an additional 20 baskets of maize.

(b) Five causes of change in supply of an agricultural produce

1. Changes in the cost of production - a fall in the price of inputs such as fertiliser, seeds and labour lowers production costs and increases supply, while a rise reduces supply.
2. Changes in weather and climatic conditions - favourable rainfall and sunshine raise yields and supply, whereas drought or flooding reduces them.
3. Changes in the technique (technology) of production - improved farming methods, mechanisation and better crop varieties raise output and increase supply.
4. Incidence of pests and diseases - outbreaks that attack crops or livestock reduce output and therefore reduce supply.
5. Government policies - taxes, subsidies and price control affect farmers' returns; subsidies increase supply while heavy taxation reduces it.