Farm management & production economics

Farm Management

• Farm Management: Art and science of organizing and operating a farm for maximum profit and efficiency.
• Objective: To earn the maximum possible net return from farm resources.
• Farm: A business unit that produces crops or livestock for sale or consumption.
• Farm Manager: Decision-maker who allocates land, labour, capital, and management efficiently.

Types of Farms

1. Peasant Farm: Managed by owner and family labour.
2. Capitalist Farm: Operated on hired labour and machinery.
3. State Farm: Owned and managed by government.
4. Cooperative Farm: Jointly owned and managed by group of farmers.
5. Specialized Farm: Produces mainly one commodity.
6. Diversified Farm: Produces several enterprises to minimize risk.
7. Subsistence Farm: Production for family consumption.
8. Commercial Farm: Production for sale and profit.

Farm Planning

• Farm Planning: Preparation of a programme for efficient utilization of available resources on a farm.
• Steps in Farm Planning:
  1. Determination of objectives
  2. Collection of information
  3. Identification of resources
  4. Analysis of alternatives
  5. Selection of the best plan
  6. Implementation and evaluation

Farm Budgeting

• Farm Budget: Statement showing the estimated income and expenditure of a farm.
• Types:
  • Partial Budget: Evaluates effect of small changes in the farm plan.
  • Complete Budget: Compares total costs and returns of the entire farm.
  • Enterprise Budget: Prepared for each enterprise (crop/livestock).
  • Cash Flow Budget: Shows inflow and outflow of cash in a period.

🔹 Farm Records

• Importance: Helps in analysis, planning, and decision-making.
• Types of Records:
  1. Physical Records: Land use, crop yields, machinery.
  2. Financial Records: Receipts, payments, profit/loss.
  3. Inventory Records: Assets and liabilities.
  4. Labour Records: Wages and work performed.

Production Economics

Definition; Production Economics is the study of resource (input) use and product (output) generation to achieve economic efficiency.

🔹 Basic Terms