Less Developed Areas Farmers Agricultural Investment Demand Analysis

It is important to analyze the rural household investment demand to agriculture in the less developed area because it not only affects the increase of farmer's income, but also affects the development of agriculture during the shift of the dual-economy in China .In this paper, the main points are as following: there are a surplus labor force on the small scale of the farm and the average distribution system of land in a village. The household has a small scale of capital invested to agriculture. That is to say, it has the capability of investment to agriculture. But during the period of the shift dual-economy, the profit gained from agriculture is less than that from other. As a result, the degree of household desire to invest agriculture has become lower than to do other, and traditional agriculture would have not developed any more. The points can be discussed from a few aspects orderly.1. The definition of the less developed area's rural household investment demand is given here. In this paper, the less developed area, where the household mode of production is transiting from autarky to commodity production, is that of traditional agriculture which is the main sector of dual-economy in our country. And the household investment demand includes the investment capacity and the investment desire, both of which depend on the household mode of production of their autarky and commodity production.2. A positive study is used to analyze the household investment to agriculture. According to the content of the household investment demand, if the household is able to get necessary factors of production when agriculture has comparative advantage, the demand will be true.When the household wants to maximize its output, the output to be acquired would depend on how to get enough factors of production including land, capital labor force and technology. In less developed areas, it is reasonable to suppose that when the quantity of land and the condition of technology is fixed, the household investment demand to agriculture can be regarded as its demand for capital under the surplus labor force. Then the scale of farmer's land restricts the quantity of capital to be invested. When the proportion of the capital to farmer household income or its cost of production and living is small, the household investment demand to be satisfied could be easy.When the household wants to maximize its income, which can be regarded as money, the comparative advantage of agriculture becomes low; the household investment demand to agriculture could decline. And then factors of production including land, capital and labor are drawn from farm and invest to other. In addition of the supply of produce declining, the agriculture will be at the edge of danger. In this paper, the view of rural household investment demand to agriculture that has declined is testified by analyzing investment of factors including land, capital and labor and agricultural comparative advantage in our country in recent years.3. According to the view proved, it is possible to understand the effect of government's finance, monetary, law and administration policies that protect agriculture. The conclusion is as following: only could the policies play positive role under the shortage of produce or some households having enough capital to invest to their farms. But, if agricultural comparative advantage becomes low, the policies to encourage fanner household investment to agriculture have little effect.