Course Name: Economics of Agriculture

Course Code: Econ 4111

This Course contains two courses: Economics of Agriculture and Agriculture & Rural
development. The first part of the module, Economics of Agriculture, deals with feature of
traditional agriculture, agricultural development theory, supply response in agriculture, the
theory of technological change and innovation, agricultural finance and main features of
rural credit markets, and analysis of the allocation behaviour of peasant operators in
developing countries.

Course Objective
The objective the Course is to
 Provide students with an exposure to the major problems, theories, models and policies
of agricultural development.
 Acquaint students with preliminary knowledge of economic principles of agricultural
production and response behavior of smallholder operators in developing countries.
 to equip students with the required theoretical tools of economic analysis relevant to
the problems of agriculture in developing countries.
 Equip students with relevant theoretical and practical issues related to technological
change, and adoption and diffusion of agricultural technologies.

1. Introduction
1.1 Definition and scope of economics of agriculture
1.2 Specific feature of agricultural production
1.3 Main attributes of traditional agriculture
1.4 Agricultural systems:
5 Hours
1.4.1 Low external input agriculture (shifting cultivation,
pastoralism, peasant agriculture)
1.4.2 High external input agriculture (the case of Industrial
& green revolution agriculture)
2. Economics of Agricultural Development
2.1. Changing views/perspectives of the role of agriculture since 1950
2.2. The classic role of agriculture in Economic Development
2.3. Agricultural transformation & development
 The need for agricultural transformation
7 Hours  Phases of agricultural transformation
2.4. Conditions for agricultural development
 Technology and innovation
 Conducive institutional and pricing policies
 Education
3. Supply response in agriculture
3.1. The conventional supply response model
3.2. The modified supply response in the context of agriculture
9 Hours
3.3. The Cobweb model
3.4. Hypothesis about supply response in peasant agriculture
4. Technical change in agriculture
4.1. Source of technical change in agriculture
4.2. Characteristics of technical change
4.3. Adoption and diffusion of technologies
9 Hours
4.5. The economics of technical change
4.6. Induced innovation
4.6. Adoption of new varieties
5. Agricultural marketing

1
 5.1 Marketing characteristics
5.2 Functions of agricultural marketing
5 Hours 5.3 Marketing agents and enterprises
5.4 Integration and diversification of marketing
5.5 Transaction costs and marketing efficiency
6. Agricultural Finance & Rural credit markets
6.1 Why do people demand credit in rural areas
4 Hours 6.2 Sources of rural credit
6.3 Characteristics of rural credit markets
7. Uncertainty and farm Decision making
7.1 Sources of Uncertainty
7.2 Decision Making under Uncertainty
7.3 Mechanisms of Mitigating risk and uncertainty
9 Hours
 Risk-averse peasant
 Drudgery-averse peasant
 The Sharecropping peasant

Course Policy
 Late coming is not allowed and no student is allowed to enter after class has started.
 Duplication of assignments is strictly forbidden; it entails serious penalty.
 Assignments are required to be submitted before or on the deadline.
 Cheating during exam sessions results in a minimum of “F “grade while cheating in
quizzes and tests is subjected to a zero mark. All cheating cases will be reported to the
department for further considerations.
 Students should switch off their cell phones while they are in class and must keep their
cell phones switched off during all kinds of exam sessions.
 Students must attend 80% of the class for the course. Failure to attend 80% of the class
will not allow the student to sit for the final exam.
 Missing a quiz without convincing evidences will earn the students a grade of zero marks
in that specific quiz

References
1. Ellis, F. (1992), Agricultural Policies in Developing Countries, Cambridge University
Press
2. Colman and Young, Principles of Agricultural Economics (1988), Cambridge University
Press
3. Ghatak and Ingersent (1996), Agriculture and Economic Development, Harvester Prss
4. Dejene Aredo (2011), Agricultural Development: Theory and Practice; Aster Nega
Publishing Enterprise
5. Gail L.C, C.W. Jensen and Douglas D. 1997. Agricultural Economics and Agribusiness.
7th Edition
6. Harold G. Halcrow. 1984. Agricultural Policy Analysis.
7. Holmberg, J. 1992. Making Development Sustainable. International Institute for
Environment and Development
8. Rao, P.K. 2000. Sustainable Development. Economics and Policy. Black well
publishers Inc.
9. Reports on the Ethiopian Economy. Ethiopian Economic Association (Different
Volumes)
10. Todaro, M.P. and S.C. Smith 2003. Economic Development, 8th Edition. Pearson:
Addison Wesley.
11. Workneh Negatu, Legese Dadi and Abebe Haile Gebriel (eds) 2003. Agricultural Policy
in Ethiopia's Economic Development: Scope, Issues and Prospects.