FARM BUSINESS

-Production Factors of Farm

Business-
(Agrotechnology – I)
Arranged By :
Catalina Dara Ayu Az-Zahra (H0718043)
Okky Talitha (H0718123)
Syela Yohana (H0718148)
Definition of Farm Business

Farm Business is a farmer who

manages and coordinates the
factors of production in the
form of land and natural
surroundings as capital so as to
provide the best benefits.
(Suratiyah, 2015)
 There are 4 factors of production in farming

Natural Labor Management Factors of

Production Production Production Capital
Factors Factors Factors Production
 Climate Factor
1. Natural
divided into two
Factors of
Soil Factor
Production

Climatic Factors that Affect Crop Soil Factors that Affect Crop
Production Production

• Soil Type and Nature

• Soil Fertility in Physics, Chemistry,
And Biology
• Quantity (area) and Land Quality
Climate can affect
crop production, i.e.
• Type of plant
• Farming techniques
• Product quantity & quality
• Crop rotation pattern
• Type & intensity of pest &
disease attacks
• Water availability,
temperature, etc.
 • Land relation with farmer : proprietary, lease rights, rights of sharecrop
As One of • Willingness of farmers to increase production, improve soil fertility and
intensification
The Factors
• Land location, if the land is scattered (fragmentation), it will result in a
of waste of time and energy, difficulty in supervision, as well as greater
Production, disputes between farmers.
Soil • Intensification: increased production per broad unit, if the land for
Affected farming is difficult to expand. It can be done by increasing capital and
labor.
by:
• Increasing soil fertility by well prepared land, rotating crops properly,
fertilizing, etc.
• Land area: farm area (total land area, land area)
• Location of the farm area determines market continuity
• Facilities: Irrigation, Drainage
 The use of family labor and non-
family labor are influenced by:
2. LABOR FACTOR 1. The area of land under cultivation
A. SOURCE : 2. Power intensity: the total amount
of energy needed to cultivate a
single crop area (1 Ha) counted in
• Family Labor Man Hours
• Non-Family Labor/ 3. Types of plants
External Labor 4. The level of farm development
(wages)
5. Natural circumstances
 Family Labor
• a group of people who live from one root of income

Non- Family Labor

External Labor activity is affected by:
1. Wholesale wage system, daily wage
(part-time)
2. The amount of working hours
3. Daily life/lifestyle
4. Labor skills
5. Age
Labor Needs
• Analysis of labor per commodity or per
farm can be calculated with man days or
man hours unit.
• Labor analysis in farming will be better if
it is calculated by the man hours system,
because not all regions have the same
working day, besides the type of work in
one area is not necessarily the same.
Labor Intensity
The amount of labor needed in farming to
cultivate a type of plant per unit area.
B. Type of Labor
Human labor Engine labor Livestock labor
(differentiated
based on kinds of Tractor, rotavator, cattle, buffalo,
work, physical rice-planter, horses
ability, work skills) harvester, etc.
Male labor
Female labor
Child labor
 Measurement of labor efficiency:
Labor Efficiency
• Comparing the number of
products with the labor used
(output-input ratio)
• Comparing the area of farming
with the number of labor (will be
efficient when using fewer workers
in the same area)
• Comparing farm income with the
amount of employed labor.
 Capital Classification Based on Its Function
3. Capital Production
Factors Fixed Capital Circulating Capital
permanent assets, inventory of goods,
Capital is one of the factors of patents, goodwill, land, accounts receivable,
production for the machinery, shares and and cash
sustainability of farming. The other securities
meaning of capital is goods
that are needed in a business
and must be owned by a
business entity in order to
carry out activities such as
producing goods or services
to benefit from the business.
Capital Classification Based on The Source

INTERNAL CAPITAL EXTERNAL CAPITAL

• Internal capital is capital issued
by the farmer himself who
comes from savings or the rest
of the results of previous
farming.
• E.g. savings, the income of
farming or revenue, and profits
• External capital is capital from
other than farm income and is
usually in the form of loans
• Farming loans can be in the form
of formal credit, non-formal
credit and partnership.
4. MANAGEMENT PRODUCTION FACTORS
Farm management is Introduction of understanding of the principles of
the ability of farmers farming techniques in order to become a good
to determine, manager:
organize and
coordinate the factors 1. The behavior of the business branch
of production that 2. Technological development
they control as well
as possible and be
3. The level of technology mastered
able to provide 4. Carrying capacity of the method controlled
agricultural 5. Cultivation methods and other alternative
production as methods based on other people's experiences.
expected.
 The Role of Farmer
The Main
The role of farmers in farm business is not only
as workers or laborers but also regulates the Function of
managerial of farming. As a manager of Farmer as a
farming, farmers must understand and be able Manager
to strive to always get profits or profits from
farming.
Farmers also need to regulate the financial 1. Make decisions
system in their farming business, such as 2. Carry out the
forming cash, managing every income and decision
expenditure, and returning loans.
3. Bear the risk
 Entrepreneurship
Entrepreneurial expertise includes • Tecnikal skills
the skills of entrepreneurs to • Human relation skills
organize or implement management • Conseptual skills
activities of various other factors of • Decision making skills
production (input) so that their
• Time management
businesses are successful and well skills
developed and can provide goods
and services needed by the • Global management
skills
community.
• Tecnological skills
Thank You