Farm Planning
farm planning may be defined as the process of making decisions regarding the organization and operation of a farm business so that it results in a continuous maximization of net returns of a farm business.
Types of farm plans
Farm plans are categorized into two sub-groups viz.,
- Simple farm plan implies planning for minor changes or for a particular enterprise.
- Complete farm planning envisages more number of changes in the existing organization. It is adopted for the farm as a whole.
Characteristics of Good farm plan
- It is should be written.
- It should be flexible..
- It should provide for efficient use of resources.
- Farm plan should have balanced combination of enterprises. Such combination in turn ensures,
- Production of food, cash and fodder crops.
- Maintain soil fertility.
- Increase in income.
- Improve distribution of and use of labour, power and water requirement throughout the year.
- Avoid excessive risks.
- Utilize farmer’s knowledge and experience and take account of his likes and dislikes.
- Provide for efficient marketing.
- Provision for borrowing, using and repayment of credit.
- Provide for the use of latest technology.
Budgeting
- A budget is a financial plan that outlines estimated income and expenses over a specific period, usually monthly, quarterly, or annually.
- Budgeting is like creating a financial plan for your farm. You estimate the costs and revenues of your farming activities. It helps you see how much money you’ll make and spend.
Types of farm budgets
- Enterprise budget
- An enterprise is defined as a single crop or livestock commodity being produced on the farm. An enterprise budget is an estimate of all income and expenses associated with a specific enterprise and estimate of its profitability.
- Enterprise budget can be developed for each actual and potential enterprise in a farm plan such as paddy enterprise, wheat enterprise or a cow enterprise. Enterprise budget can be organized and presented in three sections income, variable costs and fixed costs.
- Partial budget
- It is used to calculate the expected change in profit for a proposed change in the the farm business. Partial budget is best adopted to anlysing relatively small change in the whole farm plan. partial budget are of three types.
- Enterprise substitution: This includes a complete or partial substitution of one enterprise for another. For example, substitution of sunflower for groundnut.
- Input substitution: Example : Machinery for labour, changing livestock rations, owning a machine instead of hiring, increasing or decreasing fertilizers or chemicals.
- Size or scale of operation: This includes changing in total size of the farmbusiness or in the size of the single enterprise, buying or renting of additional land , expanding or decreasing an enterprise
