Farm Management

Our agricultural scene is a changing rapidly since the mid-sixties when we experienced the ‘Green Revolution’. It was followed by the ‘White Revolution’, which brought in the flood of milk in the country. Now, we are on way to ‘Yellow Revolution’ i.e. revolution in fruit production. An important fact behind these revolutions is the economic consideration. Farmers have been adopting the new technology in agriculture and related fields mainly because of these innovations pay more all compared to their tradition crops. Agriculture has become more market oriented. The considerations of cost of production, income and profitability are summing significance. Thus, the Agri-economics has come in. The farm management is the field closely related to agri-ecomnomics. There is no doubt that farmers adopting new technology are quite conscious about the management of their farm. However, there is general apathy about the farm management amongst the farmers, Agri-scientists and the policy makers. Being a relatively young since, no much attentions is post to it. There may be some sound reasons for this. However, with changing scenario in agriculture, the need for guiding farmers in management of their farms assumes significance. In any business proposition, management has to play a significant role. In other sectors of the economy,  ‘management’ has become a catchword. In recent years, the irritations giving training in ‘management’ are increasing by leaps and bounds. There is good demand for ‘managers’ trained in these institutions. Now, the technical persons having engineering and other vocational background are turning towards MBA and allied courses. However, with rare exceptions, there are no such Institutions for training persons in farm management. These are institution for guiding farmers in this subject one of the reasons for this may be that our farming is relatively a small-scale farming and the scattered one. However, looking to the changes that are taking place. In agriculture sector, there is need for guiding the farmers in this economic aspect. The subject matter covers several aspect such as decision making, farm planning, resource planning (land, labour, capital), farm costing, farm accounting, marketing, analysis of case studies of successful farmers. The use of efficiency measures to evaluate the enterprise is also an important aspect of farm management. In the recent years, the statistical tools such a production function, linear programming are being used to get an idea about the resource. We in an enterprise and for getting an optimum plan for a given farm taking into account the resources and the limitations in which it is being operated. In the near future the farm management is likely to assume move and move significance.


     Decision Making in Farming Business

Decision making in any business largely depends on the nature of business. To understand decision-making in farming, it is necessary to know the nature of Indian farming.

1. Nature of Indian Farming:

   1. Indian farming is basically a subsistence farming. But due to new technological developments in all the areas of production, productivity of crops and live-stock has increased substantially, total production has increased several times and marketable surpluses with the farmers have also increased. As a result farming has assumed commercial proposition.

   2. Indian farming is a diversified and mixed type of farming. The farmers grow 5-6 crops or even more on their farms.

      1. to meet their family requirements

      2. to suit their soils on the farms and considering availability of resources including irrigation and market facilities. They also follow mixed farming, that is they keep few milch animals and follow dairy and also undertake sheep or goat keeping poultry keeping, etc. to supplement incomes from crop production. Therefore decision making on such farms is more difficult and complex than on specialized farming.

      3. Indian farming is a family type farming. Farm family provides major part of labour and also provides some capital.
         

2. Role of Farmers:
   Indian farmer plays following four rules simultaneously:

   1. He is an entrepreneur

   2. He is a Manager

   3. He is a Financer

   4. He is a Labourer or Worker,

   He takes decisions in two capacities as an entrepreneur and a manager.

3. Area of decision Making:
   There are four major areas of decision making:

   1. Production of crops and live-stock.

   2. Acquiring inputs.

   3. Obtaining credit.

   4. Marketing his produce.

   1. Production: The decisions related to production activity are:-

      1. What to produce ? i.e. selection of crops and live-stock activity. Whether to have dairy, goat keeping or poultry or their combination.

      2. How to produce ? Adoption of suitable technology ; whether to continue old technology or use new technology or combination of both.

      3. How much to produce ? To consider family requirements in respect of foodgrain, vegetable, spices, fruits, milk, etc and also think of producing marketable surpluses. In that case, think of demand supply position availability of market and prevailing prices. This will also apply to production of cash/commercial crops.
         

   2. Acquiring inputs: In modern commercial farming, wide range of inputs are required. They include seeds of high yielding and hybrid varieties, fertilizers, pesticides, plant growth regulators (hormones), improved implements and machinery, etc. There are commercial and specialized agencies dealing in these inputs. The farmer has to take decision and make choices relating to -

      1. From whom to buy ?

      2. At what price to buy ?

      3. How much to buy?

      4. Whether to buy on cash or on credit ?
         

   3. Obtaining credit: Although the farm family supplies some finance, it is not adequate considering larger financial requirements of modern agriculture. Therefore, farmer has to borrow from outside sources. In this connection he has to take following decisions. There is risk in borrowing.

      1. How much to borrow ?

      2. From whom to borrow ? There are some alternative sources viz. Moneylenders, banks, government incentive schemes, friends, relatives, traders, etc. He has to make right choice –

      3. At what rate to borrow ?

      4. What security/mortgage to offer ?

      5. How repayments to be made ?

      6. How to face risk situation ?
         

   4. Marketing the produce: When surplus produce is obtained or created, its disposal or marketing advantageously becomes necessary. Following decisions are involved in the marketing of farm produce.

      1. Where to sell ? This is the most important decision because in rural areas big, wholesale and organized markets are limited. As far a individual farmer is concern, his produce is of small quantity, he has no transport facility, there are no good roads to go to distant markets. The farmer has to make choice within limited alternatives.

      2. Whom to sell ? There are various types of agencies such as villager trader, wholesale cum commission agents, co-operatives, government (for selected commodities ). He has to make choice from among them.

      3. When to sell ? Immediately after harvest when pries are the lowest or wait for better prices. He is also constrained by cash requirements for family expenditure. He has to take decision under most unfavourable situation.

      4. At what price to sell ? Here the position of farmer is very vulnerable. He has almost no choice. Prices in organized markets (Regulated markets ) are fixed by open auction and he has to accept the price quoted by the highest bidder even this price may not be remunerative. In unorganized markets, prices are fixed by traders and farmer is hardly consulted. He has very limited scope for decision making.
         

4. Decision Making:

   1. Decision making is an art as well as science. It is more a brain work. The quality of decision making is dependent on level of formal education, knowledge of the subject and experience. It is a continuos process.

   2. The responsibility of decisions is borne by the decision maker in terms of rewards and punishments for taking right or wrong decisions. If he takes right decisions, production increases, income and profit increases, and his family welfare improves (by labret). This is a reward for him. If he takes wrong decisions the level of production goes down, there is no profit or low profit and low family welfare. He gets self-punishment.

Agri-Knowledge
(Farm Mgmt)