Capital Requirements In Agriculture: An International Comparison

Capital requirements may be expressed in various ways but when comparisons are to be made between situations of great variety it is best to express them per unit of annual product. The definition of product also raises difficulties. Here it is measured net of agricultural inputs but still gross of industrial inputs. The study approaches the problem by first considering the capital requirements of the simplest types of agriculture and then moving up the scale towards the more advanced. Simple forms of crop culture using hand tools may require only 0.1 to 0.2 of a year's product in the form of capital. These requirements increase when livestock are added, either for draught power or for their products. Increases also occur when tree and bush crops are introduced. In the less favourable climates, capital is also needed for the provision of shelter. When comparisons are possible between farms of different sizes, the greater capital requirements per unit of product for the smaller farms are clearly to be seen. In general the amount of capital per unit of product in agriculture is tending to fall, both through improvements in techniques and through an increase in the average size of holding.