Maximizing profits from the farm business using Farm Management [Part 2]

June 18, 2012
By Krishiworld


Basically farm management is economics in the context of fundamental definition of economics which involves three elements, viz. the scarcity of resources. their alternative uses & the objective of profit maximization. It is this science which deals with making rational, profitable & economic recommendations to the farmers. It also deals with the growth & stability aspects of economics.

The basic information about the multiple (alternative)uses to which the scarce resources can be allocated is supplied by other physical & biological sciences. The research in these sciences should continually generate the relevant data on alternative technologies & practices whose profitability can be tested under actual farm situations. And these data are required for the farm organisation as a whole & not far for a single hectare, animal or tree.

The challenge to the farm management specialist is to be able to integrate & synthesize the diverse pieces of information from many disciplines such as agronomy, animal husbandry, horticulture, soil science, plant breeding, entomology, plant pathology, general economics, sociology & psychology, into an optimum ‘package’ which can be used on the farms with profit. Agricultural scientists mainly put emphasis on the maximisation of yield rather than on the use of the optimum level of resources. But the goal in farming is not to make a profit on some single enterprise or from a part of the farm land as some krishi pandits do, but to use land, labour, & capital resources in such a way that they make the greatest contribution to the total profits from the entire farm. The superiority of this discipline, thus, lies in its treating the farm as an operational unit & tailoring the recommendations of all other disciplines to fit into an individual farmer’s pattern of resources.

In the context of the recent technological breakthrough, management today should be viewed as a process within a rapidly moving frame of reference. ” It is now more scientific, less artistic; more dynamic, less static; more versatile & less rigid”. Farm management is forward-looking in its approach. Its task is not so much the improvement of the present farming practices but of the establishment of the whole sets of new production methods & farming systems which would put our agriculture on a continuously rising growth curve.

Government policies should change the economic environment to help the interests of the farmers to converge on the national goals. Studies on farm management to determine the responsiveness of the farmers to different levels of of prices become extremely relevant in inducing the farmers to produce the quantities of different agricultural products & services needed by society. A rational pricing policy for water is needed. Canal water, for e.g. is charged for without any direct relation to the quantity supplied. As a result, there is no incentive to the farmer to allocate water in the most economical manner. Farm management helps to identify such uneconomic practices & the most limiting factors. Irrigation or power (the bullock versus the tractor) may be a more important restriction than the lmits imposed by land. In areas where water rather than land is the principal limiting factor & the marginal-value productivity of irrigation water is very high, it should be most carefuly used rather than over irrigating a few hectaresof crops needing high water consumption.

Good farm management can lead to a highly productive use of farm resources & can avail itself of the technological revolution now going on in our agriculture.

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