PRIMARY SECTOR: CHARACTERISTICS, ECONOMIC ACTIVITIES, IMPORTANCE - ECONOMY - 2025

The primary sector of the economy includes all those activities involved in the extraction and collection of natural resources, such as agriculture, forestry, mining, hunting and fishing.

Some economies place particular emphasis on the basic segments of the primary sector that provide food, such as agriculture and fisheries, in order to ensure through autonomous food production that citizens can eat even in extreme circumstances, such as wars, blockades or sanctions..

Source: pixabay.com

The primary sector tends to make up a larger portion of the economy in developing countries than in developed countries. For example, in 2018, agriculture, forestry and fisheries accounted for more than 15% of GDP in Sub-Saharan Africa, but less than 1% of GDP in North America.

Primary sector in developed countries

In developed countries, the primary sector has become more technologically advanced. More developed economies can invest additional capital in mechanizing agriculture rather than manual harvesting and sowing.

As an example, in the US corn belt, while combine harvesters harvest corn, sprayers spray large amounts of insecticides, herbicides, and fungicides, producing a higher yield than is possible using less capital-intensive techniques.

These technological advances and investments allow the primary sector to employ a smaller workforce.

Thus, developed countries tend to have a smaller percentage of their labor force involved in primary activities, instead they have a higher percentage involved in the secondary and tertiary sectors.

characteristics

Making a general balance, the main characteristics of the primary sector can be summarized in the following sections:

- You get directly the resources provided by nature.

- Most of the time, raw materials go to the secondary sector to make consumer products.

- Covers the basic needs of human beings to survive.

- It is considered one of the oldest economic activities.

- It is responsible for providing food for human consumption and some animals.

Export revenue

Making use of natural resources can be a way for an economy to earn export earnings.

The sale of oil, gas and other natural resources has enriched many developing economies, thus allowing them to raise capital to invest in public services within the economy.

Some oil-rich countries have successfully used increased income to save for the future. For example, Qatar, Saudi Arabia, Norway.

Monopoly power

One problem with relying on the primary sector is that wealth is often unevenly distributed.

For example, a small number of companies gain monopoly power over the production of raw materials and pay workers only a small fraction of the income earned.

Many developing countries in Africa have remained poor, despite being rich in raw materials. A large primary sector alone is not enough to lead to economic development.

Volatility

Primary products can be volatile in both price and production. Commodities such as oil and food can experience large swings in price.

The demand is priced quite unstable. If prices drop, countries that are based on a particular industry may see a big drop in revenue, causing problems.

The European Union retains significant support for its agriculture through subsidies and price support.

Dutch disease

If primary products are very profitable, resources will be diverted from other manufacturing industries and concentrated only on primary industries.

The problem is that when raw materials run out or industry declines, the economy will lack broad diversification. This may be known as the "Dutch disease" or the resource curse.

Deindustrialization

In developed economies there has been a decline in primary sectors, as they take a smaller part of the economy. This can lead to structural unemployment for a period.

Economic activities

The primary sector of the economy extracts or harvests products from the land. It involves the production of basic foods and also raw materials.

Among the activities associated with the primary sector are agriculture (both subsistence and commercial), mining, forestry, agriculture, grazing, hunting and gathering, fishing and quarrying.

farming

They involve all activities concerning the agricultural sector. These activities are based on the use of the soil, except for fishing.

It uses large areas for planting, it depends on the climatic conditions, in addition to a fertile and suitable soil to be able to have an appropriate development.

The agricultural sector is extremely important, since it can be used to acquire the plant products that are needed for human and livestock nutrition.

Forestry

It is the sowing of various trees to obtain rubber and also wood. Wood is one of the main products in the world economy.

Raw wood, bamboo and other forest products are harvested to make furniture. These products have a wide range of uses in society. Even the pulp is used to create paper products.

Cattle raising

This activity resides in the breeding of domestic cattle, for their use and the trade in milk, meat or skins. Livestock production is a primary-use, all-inclusive food source.

Some livestock producers rely solely on natural forage, while others supplement with products such as corn to increase yields.

Livestock runs along the line between a primary and secondary sector business.

Fish farming and fishing

Fishing is considered one of the oldest means of human existence. Thus, fish populations are an important nutritional source throughout the world.

Wild and farmed fish from saltwater and freshwater environments have resources to meet global demands for food.

Fish oils contribute to a variety of products. Nitrogen-rich non-food by-products are ground into fertilizers.

Mining

It is the extraction and processing of valuable materials from the earth, such as minerals, metals, precious stones, sand, salt and clay.

Everything from steel for buildings to lithium for batteries comes from mining. The secondary sector relies on raw materials from mining to make specific products.

Beekeeping

This activity is based on the breeding of bees in order to obtain wax and honey, among other products.

Oil and gas

It is a hydrocarbon that is the main base of sustenance for many national economies.

Oil and gas are known for the lubricants and fuel used in vehicles. Oil is also used in the production of plastics, chemicals, electricity, lubricants, and more.

Crude oil and gas are extracted from the ground using pumps, in addition to other extraction techniques.

Importance

- The primary sector is responsible for maintaining the good supply of food in the economy.

- In developing countries, the primary sector is the one that provides employment to a large part of the labor force.

- It is the main source of livelihood in rural areas, where the labor force is largely unskilled.

- The activities carried out in the primary sector are necessary, important and indispensable for the survival of the population.

Basis for the other economic sectors

It must be remembered that without the goods produced in the primary sector, the other sectors could not function properly and would be of no use.

It is for this reason that the primary sector is considered as the starting point of any economy.

Meet the demand for raw materials

The primary sector satisfies the demand for raw materials that the secondary sector needs for its operations. It provides the basis for the other sectors of the economy.

Ranchers and farmers play an important role, because they are in charge of helping to produce all the raw materials to be used, for the most part, by the secondary sector in the creation of goods for human consumption.

Example of international companies in the primary sector

BHP Billiton

BHP Billiton is one of the world's largest mining companies. It has a total workforce of 40,000 people Its origin comes from the merger of the British company Billiton with the Australian company Broken Hill Proprietary.

This company manages a wide range of mining operations in 25 countries. It works diamonds, iron, coal, manganese, nickel, copper and bauxite.

It has development, exploration, production and marketing activities in some twelve countries, with an important position in the Gulf of Mexico, Australia and also the United States.

Primary sector in Argentina

One of the main activities of the primary sector is the production of soybeans and grains. Argentina can be considered the world leader in oils, grains and derived products.

The five main exporting companies in Argentina of oils, grains and flours dispatched about 54% of the total.

These main exporters are Cargill, Bunge, ADM Agro, AGD and Cofco. They exported 37.6 Mt of grains, oils and flours.

In addition to agronomy, livestock is the main component of the Argentine diet, being the sixth largest producer of this product worldwide.

Primary sector in Venezuela

One of the main sources that is the seat of the Venezuelan economy is oil. Petróleos de Venezuela (PDVSA) is the Venezuelan state-owned oil company.

PDVSA's function is to plan and coordinate the activities of its companies both abroad and in Venezuela. Large shipments of crude oil are made to a large number of countries abroad.

In addition, Venezuela is one of the main producers of natural gas, as well as of bauxite, iron and coal. It is also the main producer of dolomite and limestone, the base for cement production.

References

1. Wikipedia, the free encyclopedia (2019). Primary sector of the economy. Taken from: en.wikipedia.org.
2. Tejvan Pettinger (2016). Primary sector of the economy. Economics Help. Taken from: economicshelp.org.
3. Gabriela Briceño (2019). Primary sector. Euston. Taken from: euston96.com.
4. Quora (2019). What is the importance of primary sector in our economy? Taken from: quora.com.
5. John Spacey (2019). 4 Examples of Primary Industry. Taken from: simplicable.com.
6. Zach Lazzari (2018). Types of Primary Sector Businesses. Taken from: yourbusiness.azcentral.com.