ABSTRACT
This chapter concerns the microeconomics of subsistence farms, with special reference to those aspects which are important to agricultural development policy. It emphasis is on traditional agriculture, which is the antecedent of a modern agriculture. The basic inputs of a traditional agriculture are land and labor. Most governments of low-income countries formulate explicit development plans which include goals and objectives for agriculture in the aggregate and at least implicitly for individual farmers as well. Within the context of a traditional agriculture, farmer management decisions are importantly influenced by the relative weight farmers attach to the direct use of their labor in non-earning capacities and to material goods which may be produced or earned through transformation of labor in production processes. Basic attitudes toward consumption, security, and fatalism, all have an important influence on farmers' values and objectives regarding saving and investment, and they are all inextricably interwoven with the economics of the rate of return on investment.
