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:

 i. 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.

ii. Indian farming is a diversified and mixed type of

farming. The farmers grow 5-6 crops or even
more on their farms.

a. to meet their family requirements

b. 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.

c. 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:
 i. He is an entrepreneur

ii. He is a Manager

iii. He is a Financer

iv. He is a Labourer or Worker,

He takes decisions in two capacities as an

entrepreneur and a manager.

b. Area of decision Making:

There are four major areas of decision making:

i. Production of crops and live-stock.

ii. Acquiring inputs.

iii. Obtaining credit.

iv. Marketing his produce.

v. Production: The decisions related to production

activity are:-

a. What to produce ? i.e. selection of crops

and live-stock activity. Whether to have
dairy, goat keeping or poultry or their
combination.

b. How to produce ? Adoption of suitable

technology ; whether to continue old
technology or use new technology or
combination of both.
 c. 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.

vi. 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 -

a. From whom to buy ?

b. At what price to buy ?

c. How much to buy?

d. Whether to buy on cash or on credit ?

vii. 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.
 a. How much to borrow ?

b. 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 –

c. At what rate to borrow ?

d. What security/mortgage to offer ?

e. How repayments to be made ?

f. How to face risk situation ?

viii. 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.

a. 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.

b. 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.

c. 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.

d. 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.

ii. Decision Making:

i. 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.

ii. 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. 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.