Maximizing profits from the farm business using Farm Management [Part 1]

June 15, 2012
By Krishiworld

Farm management deals with the organisation & operation of a farm with the objective of maximizing profits from the farm business on a continuing basis. The farmer needs to adjust his farm organisation from year to year to keep abreast of changes in methods, price variability & resources available to him. Thus farm management is the science which deals with the analysis of the farming resources, alternatives, choices & opportunities within the framework of resource restrictions & social & personal constraints of farming business.This complex informationis integrated and synthesized to increase profitibility of the farming business, the ultimate aim being to raise the standard of living of the farming people. This does not mean that farm management deals exclusively with the maximization of income; in fact, it takes into account the goals and objectives of the individual farmer, other than income maximization. Thus this discipline deals with people or organisers and decision-makers in respect of farms and agricultural production. it is people-oriented rather than crops or livestock per se.

Farm management is a decision-making science. It helps to decide about the basic course of action of the farming business. The basic decisions of the farming business are:
(a) What to produce or what combination of different enterprises to follow?

(b) How much to produce and what is the most profitable level of production?

(c) What should be the size of an individual enterprise, which, in turn, will determine the best overall size of the farm business?

(d) What methods of production (production practices or what type of quality of inputs and their combination) should be used?

(e) What and where to market?

MANAGEMENT OF A FARM

Farm management is different from what is commonly confused with thw work of a farm manager who manages a government farm as an agronomist. His function is normally limited to supervising & handling the day-to-day routine of a farm. It normally pertains to athe existing pattern of the resource-use & crops-mix under which only the existing plan is executed, supervised & carried out. An intelligent farm manager may go a little further & look after the farm machinery to keep it going.

Farm management, is however, much more than that. Here we are not just concerned with the distribution of labour & irrigation water for day-to-day operations. The emphasis is on the decision-making function of evaluating & choosing between alternative strategies. A major concern is about adjustments which are more suitable & profitable & about exploring new situations & opportunities for maximization of income & satisfying other goals of a farmer. It is the approach under which the opportunity costs of the various resources are evaluated & adjustments in resource-use & enterprise mix are made to secure higher levels of farm income.

Following this approach, the emphasis on yield(productivity per unit of a resource, mainly land) is not ignored, but the greater focus is on the increasing of farm income through a second business organisation. As a business, farming requires the application of business methods & efficient management. To be an efficient manager, one must keep oneself abreast of developments in new technology, new practises, price trends, & economic outlook. Again a farm management man should identify the constraints in the external environment conditions, which hamper a farmer’s opportunities & plans for making adjustments in his farm organisation & render the technically superior production plan economically unattractive to the farmer.

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