Farm Management: It deals with the organization and operation of farms to maximize profits from the farm business every year, to keep abreast of changes in methods, price variability and available resources.
Thus, “farm management” is the science that deals with the analysis of the farming resource alternatives, choices and opportunities within the framework of resource restrictions as well as social and personal constraints of the farming business. This complex information is integrated and synthesized to increase profitability of the farming business with an aim to raise the living standard of the farming people.
However, farm management does not exclusively deal with the maximization of income. In fact, it takes into account goals, objectives and requirements, i.e. food, fodder, fuel and fibre of the individual farmer other than income maximization. So, this discipline deals with people or organizers and decision-makers in respect of farms and agricultural production. It is people oriented rather than directed at crops or livestock per se.
Farm management is a decision-making science. It helps to decide the basic course of action of the farming business. The basic decisions of the farmng business are:
(1.) What to produce or what combination of different enterprises to follow?
(2.) How much to produce and what is the most profitable enterprise?
(3.) What should be the size of an individual enterprise, which, in turn, will determine the best overall size of the farm business?
(4.) What methods of production (production practices or the quality of inputs and their combinations) should be used?
(5.) What and where to market?
Farm management is different from what is commonly confused with the work of a farm manager, who manages a government farm as an agronomist. His function is normally limited to supervising and handling of the day-to-day routine of a farm. It normally pertains to the existing plan to be executed, supervised and carried out. An intelligent farm manager may go a little further and look after the maintenance of the farm machinery.
Farm management, on the contrary, is however much more than that. Here the concern is not just for the distribution of labour and irrigation water for day-to-day operations, but the emphasis is on the decision-making function of evaluating and choosing between alternative strategies.
A major concern is about adjustments that are more suitable, profitable, and about exploring new situations, opportunities for maximization of income and satisfying other goals of the farmer. It is the approach under which the opportunity costs of various resources are evaluated and adjustments in resource use and enterprise mix are made to secure higher levels of farm income. Following this approach, the emphasis on yield (productivity per unit of resources mainly the land) is not ignored, but the greater focus is on increasing the farm income through a sound business organization.
Application of farm management
Farm management is applicable not only to crop farms, but also to orchards, dairying, poultry, etc. Faulty farm management has contributed more to citrus decline than the poor physico-chemical conditions of the soil, the stock-scion incompatibility, insect pests, diseases and Viruses.
Intercropping with exhaustive crops seems to be one of the major reasons for the poor health of plants. Citrus die-back or decline does not seem to be a disease by itself, but a mere symptomatic expression of the physiological imbalance owing to the cumulative effect of several factors.
Similarly, if milk production has to be encouraged it has to be made more profitable than cereal production. It has to be demonstrated that the addition of milch animals to a farm fits into its resource organization and yields higher returns.
With land as a scarce resource, efforts are made to intensify its use for maximizing profits through multiple cropping. During a given period, the relative profitability of different crop rotations is evaluated and finally selected for adoption.
Kufri Sindhuri variety of potato is not being adopted on a large scale in spite of its giving 10% higher yield than some other varieties, e.g. Up-to-date. The reason is simple. The former is a late variety and delays sowing of wheat, which decreases its yield. It is not Kufri Sindhuri potato vs Up-to-date potato, rather it is Kufri Sindhuri followed by wheat vs Up-to-date followed by wheat that matters in farm management.
Similarly, in West Bengal Where jute has been competing With rice, the situation is changing with the introduction of high-yielding varieties of wheat, which can be rotated With rice. The comparison in terms of the relative profitability now runs between jute and rice plus wheat, and not just between jute and rice. Owing to the rice-Wheat rotation becoming more profitable, jute production in West Bengal is suffering a set back. As Indian agriculture becomes more productive with the passage of time, the farmers will be confronted with the task of making the best selection from among many alternatives.
Scope of farm management
A notion that management is not important on small farms, is widely prevalent under those situations where the farms operate on a low level of technology. In small farms, the farm organization cannot be changed as much as on a large farm, but the choice in respect of farm practices and methods of production, cropping intensity etc. offer worthwhile alternatives.
Small farms may have different problems than large farms, but the principles of the efficient use of available resources to obtain maximum economic returns and family satisfaction remain the same in both the cases. Since the principles of farm management deal with the allocation of resources, they apply to small and large farms equally.
Tools of farm management analysis
Farm planning: It is a deliberate and conscious effort on the part of the fanner to think about the farm programmes, technological developments, changes in physical and economic situations, price structures etc. Thus it is a measure of economic content into farming business. The advantages of farm planning are discussed here.
Income improvement: Farm planning approach is an integrated, co-ordinated and advance programme of actions which presents an opportunity to cultivators to improve his income level, and henceforth, the maximization of profit. Such income maximizations could be achieved from a given bundle of resources by reorganizing present type of production as well as introducing changes in technology.
Educational process: Knowledge of the latest technological advances in agriculture is a prerequisite for better farm planning. So, farmers keep their information up-todate through his forced action situation of farm planning process. This acts as a selfeducating tool for the farmers.
Desirable organizational changes: This approach introduces desirable changes in farm organization and operations and makes the farm a viable unit. It may include complete reorganization of the farm business or any change in the method or practices followed on the farm.
Objectives of farm management
The objectives of farm management are the improvement in the standard of living of the farmer and to maximize net incomes of the farmer through improved resource-use planning.
The economic Viability of plan may be evaluated by budgeting. Direct economic analysis at maximizing security, minimizing risk or minimizing labour requirements can be done by working out several alternatives.
Characteristics of a good farm management
A good typical farm should have the following characteristics and information. Efficient use of farm resource such as labour, power and equipment Balanced combinations of various enterprises Avoid excessive risks and provide flexibility Utilize farmer’s knowledge, training and experience consider efficient marketing facilities, and use latest agricultural methods and practices.
Techniques of farm management
Several techniques or tools or models and aids are available to a farm planner for generating answers to multifarious farm management problems either separately or simultaneously.
Information needed for planning and budgeting
Farm planning under perfect knowledge: The information required for farm planning can be classified into following 5 categories.
(i) Resources available on the farm: Topography, drainage, soil management problem if any, soil sample, yield and history. Land holding, irrigation potential, labour on farm, working capital and available farm buildings
(ii) Outputs to be produced: list of process and farm enterprises
(iii) Technical input-output coefficients organized
(iv) Expected prices of farm products and inputs
(v) Social, institutional and personal framework of the farmer
Farm planning under imperfect knowledge: Additional data required for farm planning under imperfect knowledge are as follows:
(i) Price and yield variability information for modified linear programming.
(ii) Information required on probability distribution for probabilistic and game theory models.
- (a) possible set of events (such as various types of possible weather conditions, various credit policies, various price levels)
- (b) possible action alternatives available to the farmer
- (c) specification of possible consequences either on monetary terms or in utility terms
- (d) subjective probability distribution attached to a set of events
Farm budgeting is a method of analyzing plans for the use of agricultural resources at the command of the decision maker. The expression of a farm plan in monetary terms by estimation of receipts, expenses and net income, is called budgeting. In other words, farm budgeting is a process of estimating costs, returns and net profit of a farm or a particular enterprise.
Three major points of application of a farm budget are as following:
(i) Application prior to the crop season: outline the programme of work, and study the programme indicating planned organizations practices from the stand point of management principles.
(ii) Application during the crop season: a farm plan is best used during the operation as a flexible guide or yardstick and not as a fixed rule for every operation.
(iii) Application after the crop season: the analysis of the estimated results as compared with actual results from each of the individual enterprises and the entire farm business as a unit serves to make future plans more effective and for improving efficiency of resources and increasing net returns.
The credit forms the total capital requirement minus farmer’s owned funds. Most of the banks expect that farmers would contribute 25% of the total capital requirement as a margin money so that he has some stake in the business.
A banker is always concerned with the recovery of the loan advanced by him to the farmer. Therefore, before advancing loan, the banker examines whether the farmer is capable to repay loan from the additional returns, which he may earn from investment in alternative plans.
Under such a situation, the responsibility of farm management specialist increases many-fold. His planning for selection of alternatives should be such that the farmer earns more additional profit from the loans he has taken from the bank.
As the loan is to be paid at the end of every season, repayments include the following:-
(a) total amount in the case of self-liquidating loans that are for short periods and for purchasing seeds, fertilizers, hiring casual labour etc.
(b) the instalments of the mediumand long-term loans which are not self-liquidating and are for constructing buildings, making irrigation structures, purchasing implements and machinery etc.
The format to compare existing and the alternative plans for credit should be prepared.
It gives crop crop combination that can increase yields and farm income in an alternative plan. It also shows how to work out short term credit requirements and how to work out the repaying capacity and economic feasibility of the credit proposal.
Farming systems research (FSR)
To solve the problem of small farmers, farming system research (FSR) has been increasingly perceived as an alternative to the traditional research station methodology since the 1970s. FSR emphasizes on formal holistic approach involving systems analysis concepts and techniques, and effective integration of social scientist With biological and physical ones.
In broadest sense, FSR refers to any research that views the farm in a holistic manner and considers interactions in a farming system perspective.
The operational stages of conducting FSR are as follows:
Delineation of recommendation domain: Where access to markets and imports access to cash and credit, food, preferences, power source, farm size and risk acceptance can be important factors in making recommendations.
Descriptive and diagnostic stage: The main aim of this stage is to provide an assessment of farms priorities, decision criteria, resource availability, constramts and possible development opportunities.
Research design stage: In this stage, the design of an overall on-farm research strategy is undertaken with specific technology and farm management interventions specified for on-farm testing.
On-farm research and evaluation stage: In this stage, the interventions are tested in the biological, physical and socio-economic on-farm environment.
Dissemination and maintaining stage: In this stage, suitable interventions are extended to farmers through extension service.