Capital includes all man-made productive assets which are used in production. It in most cases is referred to as money used to start up and keep running a farming venture.It is broadly divided into fixed ad working (variable) capital.
TYPES OF CAPITAL
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. E.g Farm buildings, motor vehicles, farm tools and implements, tractors, incubators, irrigation equipment, etc.
Working or Variable Capital
These are capital or assets which are used up during the process of production. Examples include: Water, feeds, drugs, cash in hand, vaccines, litters, fertilizers, seeds, chemicals, etc.
SOURCES OF CAPITAL
Avenue from which a farmer can get money to start or ensre smooth running of a farmin venture includes:
1 Personal savings
- Gifts from friends
- Grants or aid from government and other organisations
- Loan from friends
- Loan from family members
- Loan from banks and other financial institutions
- Loan from government.
CHARACTERISTICS OF CAPITAL
- It can depreciate or appreciate.
2 The reward for capital is interest.
EVALUATION
- What is capital?
- Mention two characteristics of capital.
IMPORTANCE OF CAPITAL IN AGRICULTURAL ENTERPRISE
- It is used to establish farm enterprise
- Working capital is used in the day-to-day running of the farm enterprise.
- Working capital is used for paying wages.
- Working capital is used for the purchase of farm inputs, maintenance services on the farm, and feeding of livestock,
- Fixed capital in form of immovable houses and farmsteads provide shelter for farm operations
- Fixed capital in form of machinery provides farm power for farm operations.
- Fixed capital is used to generate more funds
- Fixed capital is used to facilitate farm expansion or increase farm size.
GENERAL EVALUATION
- Define capital.
- List the types of capital you know.
- Mention two characteristics of capital.
- State five importance of capital in an agricultural enterprise.
WEEKEND ASSIGNMENT
- Working capital is used for the following except A. purchase of farm inputs
- maintenance services on the farm C. To achieve the various stages of agricultural production D. feeding of livestock.
- The following are variable capital except A. vaccines B. fertilizers C. Incubators
- chemicals.
- Materials that are not used up during production are known as ____ A. Working capital B. Fixed capital C. Land capital D. Farm capital.
- ____ is the reward of capital. A. Wages B. Rent C. Interest D. Salary.
- Fixed capital is ____A. Moveable B. Irreplaceable C. Immovable D. Replaceable.
THEORY
- What is Capital?
- State five importance of Capital in Agricultural Enterprise.
See also