Farm management economics and which affects

Farm management which help to gain knowledge about farmeconomics

1. Farm Management Economics
Farm Mgt

Definition and Scope
 Relationship with Other sciences
 Characteristics and Significance

2. Definition
Farm
Combination of Crop and Livestock-
Common Mgt
Management

Art of Managing - test of
profitableness

3. Farm Mgt – Why?
Profit Maximization –Std of living improvement
Factors of production - (tangible and intangible)
Scarce in supply
Factors of production - can be put to alternative uses

4. Definition
Farm Mgt is a branch of Economics
which helps to coordinate the
limited quantities of land, labour
and capital, with their alternative
uses, in order to achieve the
specified ends of continuous
maximum profits.

5. Farm Mgt – Art, Science or business
Andrew Boss, H.C.Taylor and L.C. Grey
(Pioneers) - Art
G.F. Warren and J.N. Efferson – Science
L.A. Moorehouse and W.J. Spillman - business
phase of Farming
Behavioural Economist – Theory of
satisfaction

6. Acceptable and complete definition
Farm Mgt is a science that deals with
the organization and operation of
a farm as a firm from the point of
view of continuous maximum
profits consistent with the family
welfare of the farmer.

7. Farm Management is science of decision
­
making or a science of choice (continuous
process of decision-making) i.e correct
decisions
Frequent changes encountered by farmers
are,
fluctuations in prices,
 weather variations,
 inventions in farming methods,
 changes in socio-economic environment
including changes in Govt. policy and
social responses and values.

8. Functions of Farm Mgt. (Nielson)
Formulation of the goals or objectives of the
firm;
Recognition and definition of a problem or
opportunity;
Obtaining information-observation of relevant
facts;
Specification and analysis of alternatives;
Decision-making-choosing an alternative;
Taking action;
Bearing responsibility for the decision or
action taken;
Evaluating the outcome

9. Objectives – Farm mgt.
 Short term - Maximization of profit
through Farm layout, choice of enterprises, crop
choices, input selection and combination.
 Long term – conservation and ensuring
continuous maximum profits.

10. Objectives
To determine the optimum level of resource use
Deviation of existing resource use from optimum level
To evaluate the economics of new farm technologies under
different environment
To recommend suitable cropping pattern
Yield gap analysis
To analyze the factors that condition production pattern
Handling risk and uncertain situations

11. Scope of farm Mgt.
Field of Micro economics
- enterprise mix, crop management, combination of
inputs, input-output relationship
Farm management research
-delineation of homogeneous type of farming
-generation of input-output coefficients
-working out comparative economics
- formulation of standard plans, developing
suitable models of mechanization and
modernizations
- evaluation of agricultural policies

12. Ctd…
Farm Mgt teaching
-decision making process is complex
(what to grow, how much to grow, how to grow,
when and where to buy and sell)
Farm Mgt extension
-findings of research have to be demonstrated
to convince the farmers of their utility and
effectiveness.

14. Nature and characteristics
Practical science (Partial budgeting)
Profitability oriented
Integrating science (economic efficiency)
Broader field
Micro approach
Farm unit as a whole

15. Agrl.Production Economics
Agricultural Production Economics
is an applied field of science
wherein the principles of choice
are applied to the use of capital,
labour, land and management
resources in the farming industry.

16. Law of variable proportions or Law of
diminishing returns: It solves the problems of
how much to produce ? It guides in the
determination of optimum input to use and
optimum output to produce. It explains the
one of the basic production relationships viz.,
factor-product relationship
Cost Principle: It explains how losses can be
minimized during the periods of price
adversity.

17. Principle of factor substitution: It solves the
problem of ‘how to produce?. It guides in the
determination of least cost combinations of
resources. It explains factor-factor relationship.
Principle of product substitution: It solves the
problem of ‘what to produce?’. It guides in the
determination of optimum combination of
enterprises (products). It explains Product-
product relationship.

18. Principle of equi-marginal returns: It guides
in the allocation of resources under
conditions of scarcity.
Time comparison principle: It guides in
making investment decisions.
Principle of comparative advantage : It
explains regional specialisation in the
production of commodities.

19. Objectives
To determine and define the conditions which
provide for optimum use of resources.
To determine the extent to which the existing use of
resources deviates from the optimum use.
To analyze the factors or forces which are
responsible for the existing production pattern and
resource use and
To explain means and methods for changing existing
use of resources to the optimum level

20. Basic production problems
WHAT TO PRODUCE?
HOW TO PRODUCE?
HOW MUCH TO PRODUCE?
WHEN TO BUY AND SELL?
WHERE TO BUY AND SELL?