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Organization of Production

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  • Last Updated : 29 Mar, 2022
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Palampur village is a fictional community, and the tale will show how diverse resources are combined to provide the village’s desired goods and services. Palampur’s major source of income is agriculture. Dairy, transportation, small-scale manufacturing, and other industries are also present in the village.

Palampur village has a unique narrative to tell. Palampur is well connected to other villages and towns and is home to around 450 families from various castes. All of the tube wells in the fields are powered by the village’s adequate electricity. It has one dispensary and one basic health center run by the government. Palampur has a well-developed infrastructure, including roads, public transportation, power, irrigation, schools, and a health center.

Organization of Production 

The primary goal of production is to create goods and services, which necessitates the use of four main components :

Land

One of the most significant considerations is the land. It is a necessary component of manufacturing. The term ‘land’ is commonly used to refer to the earth’s surface. However, in economics, the term has a distinct connotation. The term “land” refers to not just the earth’s surface but also all other free gifts from nature, such as mineral resources, forest resources, and anything else that aids in the creation of products and services but is offered by nature at no cost.

Labour

Another important component of manufacturing is labor. In fact, no matter how valuable a component is, it is useless unless it is combined with labor. By labor, we mean any form of human activity, whether physical or mental, that is done for the purpose of earning money. Labor, unlike land, is an active part of the manufacturing process. In truth, it is labor, in collaboration with land and wealth, that allows manufacturing to take place. Without the application of labor, land and capital cannot create anything.

Physical Capital

The factor of production is physical capital. It refers to the many inputs necessary at each level of the manufacturing process, such as tools, machinery, computers, and other equipment for the creation of goods and services. It’s utilized in the manufacturing process to convert raw materials into final items. There are two forms of physical capital:

  • Fixed Capital: Fixed capital refers to equipment, machinery, and structures that may be employed in manufacturing for a long time. Tools and machinery varied from the most basic, such as a farmer’s plough, to the most advanced, such as generators, computers, and so on.
  • Working Capital: Manufacturing needs a wide range of raw materials. It is vital to have money in order to make payments and purchase other necessities. . 

There can be no manufacturing without bringing these three production variables together and applying them in the proper proportions. As a result, someone must hire them from their owners in exchange for rent, salaries, and interest, as well as determine the proportions of each required for production. This is referred to as a business. The services of an entrepreneur, who oversees, organizes, and assumes all risks, are referred to as enterprise.

Farming in Palampur 

The land is fixed

Village farming is the major source of income for the inhabitants of Palampur, and their well-being is linked to farm output. However, there remains a fundamental restriction in increasing agricultural productivity. The amount of land that is cultivated is basically fixed.

Cultivation of more plants in the same land 

Kharif farmers plant jowar and bajra during the rainy season, followed by potato production between October and December. Farmers produce wheat in the winter, while a portion of the land is dedicated to sugarcane, which is collected once a year. Farmers can cultivate three distinct crops thanks to well-developed irrigation. The irrigation system was converted by electricity. Many cropping refers to the cultivation of multiple crops on a single plot of land. Modern farming is another approach to increase production. The Green Revolution exposed the Indian farmer to wheat and rice production utilizing high-yielding varieties (HYVs) of seeds in the late 1960s.

Support to the land

The natural resource base has been abused by modern farming practices. The soil lost its fertility as a result of increased usage of chemical fertilizers. Natural resources such as soil fertility and groundwater are depleted, and restoring them is extremely challenging.

Land distributed among Palampur’s farmers

Any type of farming necessitates the use of land. About a third of the 450 households in Palampur are landless. Dalits do not have access to agricultural land. 240 households farm tiny parcels of land measuring less than 2 hectares. There are 60 medium and big farmers in Palampur who cultivate more than 2 hectares of land.

Labor Providence

Small farmers tend to their own plots of land. Medium and big farmers use labourers to cultivate their fields, who are either landless or have limited pieces of land to cultivate. Farm labourers will have no control over the crops cultivated on the property. They will be paid for their job in the form of wages, which can be cash or in-kind, such as crops. Meals are occasionally provided to labourers. Wages differ from one location to the next, from one crop to the next, and from one agricultural activity to the next. Agricultural labourers may be hired on a daily basis, for a specific farm activity such as harvesting, or for the entire year.

Capital in farming

Modern agricultural practices need a significant amount of capital :

  • The majority of small farmers borrow money from larger farmers, local moneylenders, or dealers who offer various agricultural inputs.
  • Large and medium-sized farmers have their farming savings. As a result, they are able to get the necessary funds.

Farm Product Surplus Sales

The farmers keep a portion of the wheat they grow on their property for their food and sell the rest. Wheat is only supplied to the market by medium and big farmers.

Non-farm Activities in Palampur

Other than agriculture, 25% of Palampur’s workers are employed in non-agricultural jobs:

  • Dairy 
    Aside from agriculture, some individuals work in the dairy industry, and the milk they produce is sold in the surrounding village.
     
  • In Palampur, there is an example of small-scale manufacturing.
    Small-scale manufacturing, which is done at home or in the fields, employs people. Simple manufacturing procedures are used in this process.
     
  • The shopkeepers of Palampur
    Rice, wheat, sugar, tea, oil, biscuits, soap, toothpaste, batteries, candles, notebooks, pen, pencil, and even some types of fabric are all sold at the village’s general stores.
     
  • Transport: a fast developing sector
    They move people and products from one location to another and are paid for their services. Roadways,waterways,railways and airways; all of them fall in this category.

Sample Questions

Question 1: Explain how land is a necessary component in the development of commodities and services.

Answer:

 The term ‘land’ is commonly used to refer to the earth’s surface. However, in economics, the term has a distinct connotation. The term “land” refers to not just the earth’s surface but also all other free gifts from nature, such as mineral resources, forest resources, and anything else that helps in the creation of products and services but is offered by nature at no cost.

Question 2: Cast some light on Physical Capital and Enterprise.

Answer:

  • Capital is the portion of the money that can be utilized to create more wealth. It comprises of all types of wealth that generate revenue, aside from free gifts from nature. As a result, capital refers to any sort of wealth other than property that aids in the development of more revenue. Machines, raw materials, buses, trucks, rail engines, ships, and other forms of capital are examples. These commodities are used as production inputs by producers. As a result, these items are also known as capital goods. 
  • The services of an entrepreneur, who oversees, organizes, and assumes all risks, are referred to as enterprise.There can be no manufacturing without putting these three production variables together and applying them in the proper proportions. As a result, someone must hire them from their owners in exchange for rent, salaries, and interest, as well as determine the proportions of each required for production. This is referred to as an enterprise.

Question 3: In Palampur, who offers agricultural labour? How are they compensated for their efforts?

Answer:

Small farmers cultivate their own land with the help of other family members. As a result, they offer the labour necessary for farming. Farm laborers are hired by medium and large-scale farmers to work on their farms.

Farm laborers are either hired from landless households or from families that have a small plot of land to cultivate. The crops grown on the site are not the property of farm laborers.

They are compensated as follows:

  • They are paid wages in cash or in kind, such as crops.
  • The government has set a minimum pay of  300 per day for farm laborers, but they do not get this amount and are frequently mistreated.
  • Poor agricultural laborers may merely work for a meal.
  • They are sometimes hired on a daily basis and occasionally for the entire year. As a result, the duration of their job isn’t set in stone.

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