What Is The Importance Of Primary Sector?


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Deborah Mann answered
  • Definition
The Primary sector is an economic description of the basic materials and agricultural sector of the economy. The Secondary sector is industry, with the Tertiary being the service industry.

  • Importance
Some countries still operate on a predominantly first sector basis. India for instance is roughly equally split between all three sectors. Essentially, a third of the entire economy is based on the first sector. Where a country is far more diversified economically, such as the USA, the tertiary levels become more important. However, all people need to eat, so the agricultural sector remains the bedrock of the economy, even where the secondary economy is more important in that particular economy.

  • Commodity markets
As most primary sector goods are sold in commodity markets, the development of the market often makes the primary sector less important as the economies begin to tip more towards the tertiary and secondary. However, the primary sector is vulnerable to price fluctuations. Commodity markets are never very stable in their prices, making an economy exclusively based on the primary sector very hard to plan ahead for. It also has an effect of making actual price determination and fixing very hard.

Due to the vulnerability of farming because of the extremes of the weather, yields are also by no means guaranteed, leading in some cases to famines and starvation.

As environmental pressures build, many non-renewable metals and minerals are becoming mined out. For example, the value of copper is such that salvaged copper is now a realistic option instead of it being mined.

Finding new supplies and sources of such non-renewable products will become increasingly difficult and begin to drive up prices for them inside the primary sector, having an effect further up the chain, making all prices in all sectors rise. This demonstrates the importance of the primary sector as a baseline on which all the other sectors are reliant.

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