# Agricultural production

Palo Verde (California) - Wheat Harvest on the Colorado River (May 1972)

Agricultural production is in the economics and business strongly localized and seasonal production of products of agriculture . The counterpart is industrial production .

## General

Agricultural production is one next to mining , fishing and forestry to economic sector of the primary production , also called "primary sector". Agriculture can be understood as the production of agricultural products for human nutrition and animal nutrition . Agricultural products are the result of agricultural production, which can be operated as a subsistence economy for the purpose of self-sufficiency for the population and / or as an agricultural export. Agricultural products are all products to the production of which the production factor soil makes a significant contribution. An agricultural product within the meaning of Section 2 (1) AgrarMSG is an agricultural product obtained by original production (agricultural product ) or a product obtained from an agricultural product through processing or processing (processed agricultural product ).

In some states, agricultural production was or is linked to the national goal of self-sufficiency , which aims at a degree of self-sufficiency of 100%.

## history

For the physiocrat François Quesnay , according to his Tableau économique from 1758, the economy consisted of three sectors, namely agriculture with peasant tenants as the “productive class” ( French class productive ), the large landowners as the “distributive class” ( French classe distributive ) and the commercial sector Economy with merchants ( French classe stérile ). Its classification put agriculture in the foreground of economic considerations. In terms of agriculture and agricultural production, Quesnay understood nature as the opposite of manufacturing and emerging industrial production. In his view, agricultural added value arises from the soil and is the only productive achievement. In 1767 he favored the agrarian state ( French royaume agricole ), the main features of which he read from the “natural order” ( French ordre naturel ). Because "the soil is the only source of prosperity" ( French la terre est l'unique source de richesse ).

Adam Smith and Thomas Robert Malthus , on the other hand, saw the primary sector as static, agricultural production natural and its increase only possible by expanding the limited cultivated soils . The consequence of this agrarian production pessimism was the sole notion of the progressive role of industry and free trade as the engine of development, from which the classic division of labor between industrialized and agricultural states proceeded with a corresponding reduction in the agricultural sector .

According to Smith, the upswing in agriculture was only possible through the fall of feudalism . In his book The Prosperity of Nations from March 1776 , he emphasized the importance of the agricultural supply surplus , because cities could only grow to the extent that agricultural production increases. The population law developed by Malthus in 1798 assumed that the land yield could only grow exponentially ( etc.) in arithmetic progression , but that the population would grow in geometric progression ( etc.), with the result of hunger and poverty . Hunger, wars or epidemics increase the death rate as actual obstacles ( English positive checks ), so that the subsistence level is maintained, but economic growth is inhibited ( Malthusian catastrophe ). ${\ displaystyle 1,2,3,4,5}$${\ displaystyle 1,2,4,8,16}$

By increasing mineral fertilizer consumption and increasing motorization of agriculture, National Socialism tried to create self-sufficiency in the food supply from 1936 on, but this did not succeed until the Second World War. The times of the two world wars and their post-war years were marked in Europe by serious problems in agricultural production and food supply. The agricultural policy was not limited to the protection of agricultural foreign trade , but also on agricultural subsidies to support agriculture.

In July 1952, the formation of “agricultural production cooperatives” in the GDR was announced at the SED's 2nd party conference. Even in free-market states, agricultural products were often subject to state market regulation , because the state tried to correct structural undesirable developments through interventions . Since the founding of the EEC in March 1957, the term market regulation received an interventionist content, because the EEC intervened in the agricultural market by buying up the overproduction of agricultural products (milk and dairy products) through production quotas to stabilize prices (" Butterberg ", " Milchschwemme "). In order to include agricultural products in the free movement of goods in the newly founded EEC and at the same time to receive public support for agriculture, the previous national intervention mechanisms were transferred to the level of the EEC. The Treaty on the Functioning of the European Union (TFEU), which came into force in December 2009, also provides for the stabilization of the markets in Art. 39 (1c) TFEU.

Onion harvest near Regensburg (September 2010)

## species

Sub-sectors of agricultural production are crop production and animal production . Agricultural production includes the production of food and luxury goods through the cultivation of useful plants such as animal feed , vegetables , grain , fruit , tobacco or wine (except wood , which is part of forestry ) and the keeping of farm animals such as domestic chickens , domestic cattle , domestic pigs or Sheep and goats (excluding edible fish which are part of the fishery ). Flour or edible fats and oils are made from crops, while livestock can be used to obtain natural products such as eggs , milk , cheese or animal fats or processed into meat .

In contrast to this economic delimitation, Article 38 (1) TFEU provides that fisheries and the products of the first processing stage that are directly related to them also belong to agricultural products.

## Production process

In the case of plants, the production process of agricultural products begins with the sowing of seeds or the planting , which is left to grow (including crop protection ) until the fruit is ripe , followed by harvesting and more or less intensive further processing . This is done by grinding , roasting , peeling , drying or refining . The animal husbandry including breeding and veterinary medicine is part of the core of the production process in farm animals, which also includes the production of milk, cheese or animal fats. The further processing of the farm animals is done by slaughtering them into meat products .

## economic aspects

If agricultural production predominates in a state, it is referred to as an agricultural state, while predominantly industrial production is an industrial state. In the latter, in turn, industrial agriculture predominates due to the heavy use of agricultural technology . It often takes place through mass production according to the law of mass production (with fixed cost degression ), so there is a tendency towards the formation of large agricultural enterprises that can better exploit economies of scale . Characteristic here is the factory farming , in contrast, stands in agricultural production to organic farming .

A large part of the agricultural products can be standardized and can therefore also be traded as commodities on commodity exchanges. Trading on stock exchanges standardizes the meeting of market participants ( farmers , wholesalers , retailers , consumers ), who no longer have to be exclusively present on wholesale markets or local product markets . The income elasticity of demand for agricultural products measures the ratio of the relative increase in income and the relative increase in expenditure on food consumption.

In the specialist literature there is talk of an inverse or anti-cyclical reaction of the agricultural producers, whereby it should be said in advance that the term "inverse" was first coined in 1952 by Walter Adolf Jöhr for an inverse adjustment of agriculture in the event of falling agricultural prices. It describes a situation that counteracts the economic movement through opposing volume and price curves. Empirical studies, however, raised doubts about the existence of this inverse production adjustment.

## statistics

In Germany, sales revenue from agricultural production developed as follows:

Agricultural product Sales revenue
in billion euros (2012)
Sales revenue
in billion euros (2017)
Grain 5.843 5.071
Potatoes 1.383 1,842
Crops 17.416 17.025
Animal products 27,451 28.664
Total revenue 52.033 52,602

Animal products accounted for the largest share, accounting for 54.4% of all sales, followed by vegetable products (32.4%) and cereals (9.6%).

In the EU member states , the output value of agricultural production (at manufacturing costs ) amounted to 435.9 billion euros in 2018 (2015: 417.3 billion euros). The main producers were:

country Share in% of
production value EU 2015
Share in% of
production value EU 2018
Germany 10.9 12.2
France 17.4 18.1
Italy 13.0 13.3
Netherlands 6.6 6.4
Spain 12.2 12.3
United Kingdom 6.9 7.9

The largest producers are the territorial states because they have a larger agricultural area available for agricultural production .

## Individual evidence

1. Ulrich Koester, Grundzüge der Landwirtschaftlichen Marktlehre , 2016, p. 16
2. Rolf Walter, Economic History: From Mercantilism to the Present , 2011, p. 49 f.
3. Ralph Anderegg, Grundzüge der Agrarpolitik , 1999, p. 23
4. his home country France was such an agricultural state
5. ^ François Quesnay, Maximes générales du gouvernement économique d'un royaume agricole , 1767, p. 330 ff.
6. ^ François Quesnay, Getreide ( French "Grains" ), in: Encyclopédie vol. 7, Nov. 1757, p. 44
7. ^ Artur Woll / Klaus Glaubitt / Hans-Bernd Schäfer (Eds.), National Development and International Cooperation , 1983, p. 30
8. ^ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations , 1776/1974, p. 174
9. Thomas Robert Malthus, An Essay on the Principle of Population , 1798/1924, p. 18
10. Hansjörg Küster, History of the Landscape in Central Europe , 1999, p. 354
11. Günther Linckh / Hubert Sprich / Holger Flaig / Hans Mohr, Sustainable Agriculture and Forestry , 1997, p. 179
12. European Parliament, Fact Sheets on the European Union, 2017
13. Landwirtschaftsverlag (ed.), Reports on Agriculture: Special Issue , Volume 161, 1955, p. 45
14. ^ Walter Adolf Jöhr, The economic fluctuations. Theoretical Foundations of Economic Policy , Volume II, 1952, p. 319
15. Karl P. Steiner, The Problem of Inverse Production Adjustment and the Phenomenon of Cyclical Supply and Price Development in Swiss Agriculture , 1957, p. 11
16. Federal Ministry of Food and Agriculture, Sales of Important Agricultural Products , Status 2018 Accessed on May 19, 2019
17. Eurostat , Output of the agricultural industry - basic and producer prices , June 2019