Due to this, large developing countries like India having potentialities of industrial development are trying to diversify their production structure and promote the exports of manufactured goods even though this requires the adoption of protective measures in the initial period of planning.
Modern agriculture includes forestry, bee keeping, fruit cultivation, poultry, and even dairy farming. Agriculture sector provides funds for capital formation in many ways as: i agricultural taxation, ii export of agricultural products, iii collection of agricultural products at low prices by the government and selling it at higher prices.
In the initial stages of economic development, it is agriculture that constitutes a significant source of capital formation. The two most important cash crops are olives and grapes, the major source of income through exports.
Agriculture sector requires less capital for its development thus it minimizes growth problem of foreign capital.
Relief from Shortage of Capital: The development of agricultural sector has minimized the burden of several developed countries who were facing the shortage of foreign capital. Converting farm labor to full time equivalents, however, reduces the proportion to about 11 percent.
Provision of Surplus: The progress in agricultural sector provides surplus for increasing the exports of agricultural products. MED works for improving agricultural production with modern means of tools and technology. The industries dependent upon agriculture and food processing enhance the importance of this sector.
In underdeveloped countries, it is well known that the majority of people depend upon agriculture and it is they who must be able to afford to consume the goods produced. From employment generation to contribution to National Income, agriculture is important.
Food processing tends to be located near metropolitan areas, facilitating employment shifts.