LECTURE XI

PRINCIPLES OF FARM MANAGEMENT

Farm Management: Meaning and Scope

Farmers are resource managers who endeavour to manipulate their land, capital and other resources to achieve certain ends.

These ends or goals vary with each farmer’s responsibilities and sometimes also with his ambitions for himself and his family.

Farm Management: Meaning and ScopeFarm business management concerns

the decisions to be made by the proprietor, owner or manager, which affect the ability of the farm to make profits.

It involves the determination of goals or objectives, planning towards their achievement, execution of the plans and the supervision, control and evaluation of results.

Farm Management: Meaning and Scope Farm management begins with the basic

questions such as: What crops to grow? What livestock to keep? How large should the enterprise be? How much of each critical resource is available? What is the quality of the resource? How much additional resource can easily be

obtained? At what cost can these be obtained?

Farm Management: Meaning and Scope Other basic questions relate to the methods of

production or technology What type of tools to use – Machines or manual

labour? Farm manager’s technical knowledge about the

Capability of resources including the soil, family labour, the breeds of livestock available and the species of crops.

When to plant the crops when to weed or control pests whether to apply fertilizer and what quantities of which type

of fertilizer to apply. Effects of pests, diseases and weeds

Farm Management: Meaning and ScopeSuccessful farm management ensures

maximum profits.The acquisition or possession of large

quantities of productive resources does not, by itself, ensure profitable operations.

The resources of capital, land, materials and labour must be properly combined and managed to achieve success.

Farm Management: Meaning and Scope The relative prices of inputs and final outputs

are essential information for the manager. Unless the farm is being managed for

subsistence, price data must determine the correct combination for maximum profit.

Government policies relating to price support or subsidies must be well understood by the farm manager.

Farm Management: Meaning and Scope The core of farm management is decision-

making. The ability to make decisions and the

willingness to take risks are vital to successful farming

Information gathered on records of previous activities supplemented by published materials play a key role in decision-making.

A farm manager needs to make unbiased judgments based on all the factors involved in the case at hand.

Farm Management: Meaning and Scope The size and type of farm may range from a

small subsistence plot of less than one hectare to a communal or state farm comprising all the land of several villagers.

They may be operated by a tenant, by an owner, or by a manager employed by a cooperative or a state farm or an absentee owner.

However, the same principles of farm management economics and the techniques apply, though with varying degrees of emphasis.

Functions of Farm Management

The functions of farm management include: Planning Organising Staffing Motivating Controlling

Planning Planning develops objectives of each level of

the farm organisation and determines ways to achieve those objectives.

Planning serves three main objectives: Setting farming goals and objectives Forecasting the environment in which farming

objectives must be accomplished based on how the farm plans adapt to both the internal (labour and farm objectives) and external environmental factors (competitors, input suppliers, government policy, climatic and topographic factors and demographic trends).

Determining the approach by which the goals and objectives are to be accomplished.

Planning Farmers plan and some spend much money

to have it done for them. Many feedlots and dairies have been

computerized, with predetermined programmes manipulating machinery that determines rations mixes and carries them to conveyor belts and feeding bunks and even cleans after animals have fed.

Horticulturalists have computerized their production systems to determine the levels of fertilizer and water applications

Organising Organizing involves the dividing of work

among departments or enterprises and then among individuals.

Persons are given the authority to do their job and are held responsible and accountable.

It is an ongoing process in the farm. There is probably no one best way to

organize a farm. A farm that has branches in several regions

of the country will probably have a more complex organization chart than a farm in only one region

Organising In a small farm or small production unit

organization is usually quite simple: One man or woman is solely responsible

for all the firm’s commitments.However, in a farm with many people,

few managers are allowed this autonomy.

There is always an overlap between the planning aspects of organizing, marketing and financing in any business.

Staffing Staffing is a managerial activity that

maintains, develops and regulates human resource systems of an organization.

Staffing deals with engagement, development, training and maintenance of people who run a planned and organized farm.

This is a human resource function that is indispensable to farm management.

It includes recruitment, selection, training, appraisal and compensation of personnel.

Motivating Workers join the farm organisation to fulfil

their personal goals. The level to which they achieve their personal

goals determines their level of motivation. The farm also has its own goals. Thus the farm manager must provide the right

mix of both satisfactions. Motivation of either production employees or

management is a complicated task. Essentially, it is the challenge of how to get

people to participate in a coordinated effort.

Motivating Common kinds of motivating stimuli include:

wage incentives additional responsibility status symbols and non-cash awards such as certificates.

All individuals in business want to feel that they are a meaningful part of a worthwhile effort.

Increasing this kind of employee satisfaction is highly correlated with increasing productivity.

MotivatingMotivation can be extended to

management just as it can to any other kind of employee classification.

Sensitivity training, planning workshops and other educational programmes can help in selecting and developing management personnel to move into the top positions.

Motivating Motivation for people to produce anything

depends on: character of a particular set of initiatives perceived consequences relation of these consequences to the personal

goals and values of the individuals involved. Some people may prefer a better work

environment and more rest breaks to being a supervisor.

Other people might prefer to have supervisory responsibility than spend all day on a routine task.

Others may prefer complicated jobs to simple ones.

ControllingControlling completes the loop or cycle

of the farm management functions. It measures the returns achieved,

compares against predetermined objectives and take corrective actions necessary.

Controlling includes the other functions of planning, organising, staffing and motivating because they are determinants of the end results.

Controlling Main objective of controlling production is:

To produce on time, within budget, and in full quality compliance with items or contract specifications.

Control also provides a capacity to cope with product changes that are brought about by research and development, competitors, or innovations in more effective cost controls.

It demonstrates how to phase production and marketing policies, reduce inventories and eliminate unprofitable products that the farm may produce without realizing they are losers.

Established and contracted standards must be maintained.

Thus inspection is a part of quality control.

Controlling Management whose job is control must

assume a delegation of authority and responsibility to make suggestions according to specified predetermined minimum standards.

Control also connotes a constant evaluation process bearing on the synchronization of production, research and development, marketing and finance.

In farming/agricultural production control is complicated because of the high risks and uncertainty in the production process.

Farm Planning and BudgetingFarm planning means assessing the

implications of allocating resources in a particular way before deciding whether to act.

It is an essential part of rational decision-making.

Planning is a part of the day-to-day activity of running a farm that is particularly important when changes in the farm system are being considered.

Few farmers would be willing to adopt an innovation without first evaluating the consequences.

Farm Planning and Budgeting For many farmers, planning is subjective and

informal. A farm plan is an outline or scheme for the

organization of resources available on a given farm.

Planning the production system involves the choice of and organization of: Farm buildings, machinery and equipment Labour Land Other inputs.

Farm Planning and Budgeting Decisions concerning crop production

systems include: Size of tractors and various types of equipment Number of tractors and units of equipment Tillage practices Time of tillage practices Hours worked per day New versus used equipment Amount of labour Methods of drying, processing, storage and

hauling.

Farm Planning and BudgetingLivestock production system decisions

include: Amounts of housing Lots and pasture for various phases of life

cycle Equipment and labour for moving feed to

livestock Equipment and labour for moving manure

away from livestock Equipment and labour for handling animals Scheduling of various functions.

Planning and Selecting Farm Production Systems Principles of Planning and Selecting Farm

Production Systems dictate that you select a production system that: Will result in relatively high crop yields and good

livestock performance. Is most profitable system depending on the

availability and cost of capital and labour, and the kind of management on the farms.

Is expected to have ten or twenty years grace period before any changes are made.

Planning and Selecting Farm Production SystemsSelect system

With the least cost of production That fits the managers ability and skills. That takes into account existing machinery,

equipment and buildings. Synchronizes different parts of the

production system to minimize bottlenecks and maximize are capacity use