Production refers to all economic activities which result in the creation of goods and services. In other words, production is the process of making or manufacturing goods as well as the process of providing services. For goods and services to be created during the process of production, certain factors have to come together. These resources or factors that are combined for goods and services to be produced are known as factors of production. There are four factors of production. These are Land, Labour, Capital and Entrepreneur or Management.



Land refers to where productive activities such as growing of crops, rearing of animals and establishment of farmstead are carried out.


Features or Characteristics of Land

  1. Land is a natural gift.
  2. Land can appreciate or depreciate in value.
  3. It is geographically immobile.
  4. It is abundant in some areas and scarce in other areas.
  5. It is heterogenous in quality, differing from one place to another in topography, soil texture, and structure and soil fertility.
  6. Because of its limited supply, land is also subject to the law of diminishing returns.
  7. Reward for land is rent.
  8. Availability is subject to land use Act/Law.
  9. Its suitability influences output.
  10. Its value is determined by its location.
  11. It can be used as collateral for loan.


Importance of Land in an Agricultural Enterprise

  1. Land is used for the cultivation of food crops such as maize, rice and cowpea.
  2. It is also used for the cultivation of cash crops, e.g ., cocoa, rubber and oil palm.
  3. It is used for the rearing of animals.
  4. It is used for forest development.
  5. It is also used for fish pond development.
  6. It is used for wildlife conservation.
  7. Land is used as collateral for securing loans from banks.


Non- agricultural Uses of Land

  1. Land is used for construction purposes, e.g, roads and airports.
  2. It can be used for social or recreational purposes e.g. stadia, schools, markets and cemeteries.
  3. Land is used for residential buildings.
  4. Land can also be used for industrial buildings.
  5. Land can also be used for mining purposes e.g. extraction of petroleum and gold.


Appreciation of Land

Land can appreciate (increase) in its value through the following ways:

  1. Fallowing – allowing farmlands to rest thereby regaining its lost nutrients.
  2. Addition or use of fertilizers or manure to increase its fertility.
  3. Use of clean uninfected inputs, e.g, planting materials like seeds.
  4. Weeding/clearing to remove weeds that compete with crops for nutrients and space.
  5. Good or appropriate soil tillage that can prevent soil erosion.
  6. Irrigation the artificial application of water to soil to supplement insufficient rain.
  7. Good access roads – to ensure proper usage of land.
  8. Good drainage – the artificial removal of excess water from soil to promote crop growth.
  9. Increase in population density which makes land expensive to buy.
See also  OIL PALM (Elaeis guineensis)


Depreciation of Land

  1. Land can depreciate or decrease in its use or value through the following ways:
  2. Erosion menace – this removes the top soil.
  3. Infestation by weeds – these remove nutrients from soil.
  4. Infestation by pests – these pests reduce the yield of crops if present in the soil.
  5. Infestation by diseases – this also reduces the yield of crops.
  6. Continuous cultivation without the use of fertilizers or manure.
  7. Abuse on land, e.g ., overgrazing, indiscriminate bush burning.
  8. Dumping of toxic materials as it tends to reduce soil fertility.
  9. Water-logging – this also reduces soil fertility and land for farming.



Labour includes all forms of productive human efforts put into or utilised in production. It also refers to man’s mental and physical exertions generated in the process of production.


Features or characteristics of Labour

1) Labour is also one of the factors of production.


2) Human effort can be intellectual or mental, manual or physical, provided it is directed towards the production of goods and services.


3) Labour is mobile and has feelings and cannot be used anyhow.


4) Labour exists in three kinds. These are:

  • Skilled Labour (White Collar Jobs): Highly educated and technical to provide the expertise for farm operations.
  • Semi-skilled Labour: Averagely educated to perform simple farm operations.
  • Unskilled Labour: (Brown Collar Jobs): These are illiterates that provide manual labour for farm operations.


5) The unit of labour is man-hours or man-days.


6) The reward of labour is wages and salaries.


7) It converts natural resources into usable products.


8) It is a variable asset.


9) Its size and quality influence production or output.


10) Its output can be improved by training.


Forms of labour available to the farmer include:

a) Family Labour

  1. This refers to the labour provided by the man, his wife and children, i.e, the farmer’s family).
  2. It involves the head of the family as the operator/manager.
  3. He organises the family labour by himself.
  4. He assigns job to each member of the family.
  5. This is the major source of labour available to the farmer and it is very cheap.


b) Personal Labour: This is the labour provided by the owner of the farm.

See also  RABBIT


c) Communal Labour: This is the kind of labour provided by neighbours and the community.


d) Hired or Paid Labour

  1. This is the kind of labour that is paid either daily or they receive salary at the end of the month.
  2. It is common where a farmer has large farm size.
  3. Hired labour is engaged either in a permanent or time-rated basis.
  4. The farmer pays for each labour.
  5. It is not readily available; hence, expensive.


Importance of Labour in Agricultural Enterprise

  1. It uses other factors for production.
  2. Intellectual labour ensures high agricultural production.
  3. Skilled labour provides the expertise required for major farm operations.
  4. Labour ensures the success of any agricultural enterprise.
  5. It provides the services required to achieve the various stages of agricultural production.



Capital includes all man-made productive assets which are used in production. In other words, these are assets made by man to enable him to produce goods and services.


Features or Characteristics of Capital

1) Capital is also a factor of production.


2) Examples of capital are hoe, cutlass, tractor, farm building, cash in hand and plough.


3) It can depreciate or appreciate.


4) Sources of capital include personal savings, banks, government agencies and co-operative societies.


5) The reward for capital is interest.


6) It is a stock of assets used in production.


7) It is used to purchase farm inputs, e.g, seeds, agro-chemicals or used as working capital.


8) It is used to acquire other factors, e.g, land and labour.


9) It is obtained in form of loans or subsidies.


10) Capital is grouped into two classes:

  • Fixed Capital: These are capital or assets purchased for continuous use in production. In other words, these are items or materials which are not used up during production. Examples of fixed capital include: farm buildings, motor vehicles, farm tools and implements, land, furniture and fittings, incubators, ploughs, harrows, tractors, milking machines, feeders, drinkers, hoes and irrigation equipment.
  • Working or Variable Capital: These are capital or assets which are used up during the process of production. Examples are: water, feeds, drugs, cash in hand. vaccines, litters, fertilizers, seeds and chemicals.


Importance of Capital in Agricultural Enterprise

  1. Working capital is used in the day to day running of the farm enterprise.
  2. Working capital is used for paying wages.
  3. Working capital is used for the purchase of farm inputs, maintenance services on the farm, and feeding of livestock, etc.
  4. Fixed capital in form of immovable houses and farmsteads provide shelter for farm operations.
  5. Fixed capital in form of machinery provides farm power for farm operations.
  6. Fixed capital is used to generate more funds and the success of farm enterprises usually depends on the maximum use of these capital assets.
  7. Working capital helps to facilitate farm expansion or increase in farm size.
  8. Capital is used to establish farm enterprise.



Management refers to the person or group of persons who co-ordinate, organise and control the use of other factors of production. In other words, the person(s) who combine other factors of production (land, labour and capital) to produce goods and services is called the entrepreneur or management. Management determines when to produce, what to produce, type of production, supervises work, recruits workers, determines what to sell in order to make profit. The profitability of the farm depends on the management.


Features or Characteristics of Management

  1. It involves the management skills of an individual or group of persons.
  2. Management influences the organization of other production factors.
  3. It co-ordinates and controls other factors of production.
  4. It is involved in decision making.
  5. It determines the level of pay or wages.
  6. Management reward is profit.
  7. The quality of management influences the output.
  8. The cost of management is determined by its quality.


In agriculture, the farm manager is usually regarded as the entrepreneur whose duties include the organisation, administration, production and marketing of produce from the farm. The reward for management is profit.

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