Lecture 16 Farm Planning

For undergraduate agricultural students of the course ‘Ag. Econ. 6.4 Farm Management, Production, and Resource Economics (2+1)’ of Junagadh Agricultural University, Gujarat and other State Agricultural Universities in India.

1. Lecture 16: Farm Planning
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2. Farm Planning:
•Asuccessfulfarmbusinessisnotaresultofchancefactor.
•Farminghasbecomemorecomplexbusiness.
•Definition:Farmplanningmaybedefinedastheprocessof
makingdecisionsregardingtheorganizationandoperationofa
farmbusinesssothatitresultsinacontinuousmaximizationof
netreturnsofafarmbusiness.
•Makingdecisions:Itshowstheenterprisestobetakenupon
thefarm;thepracticestobefollowedintheirproduction;use
ofinputs;investmentstobemadeandsimilarotherdetails.
•Afarmplanisaprogrammeoftotalfarmactivityofa
farmerdrawnupinadvance.
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3. Importance of farm planning to a farmer
1. Choose different farm activities suited to the given farm conditions.
2. Look into the futureand decide on suitable course of action.
3. Select appropriateenterprise combinations that results in the better
use of resources.
4. Timingvarious jobs and operations for smooth conduct of operations
without competition.
5. Avoid wastages that occur in the resource use.
6. Provide guidanceand flexibility for ensuring better use and growth
of the farm business.
7. Provideallocation of resources for producing the requisite products
for marketing and household consumption.
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4. Types of farm planning:
•Simple farm planning:
-Adopted for part of farm or for only one enterprise
-Simple and easy to implement
•Complete or whole farm planning:
-Planning for the whole farm
-Adopted when major changes are planned
-e.g.: Establishing a green house
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5. Objectives of farm planning:
1. The immediate objective of farm planning is
to maximize the annual net income sustained
over a long period of time.
2. The maximization of net income through
improved resource use planning.
3. The ultimate objective of farm planning is
improvement in the standard of living of the
farmer.
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6. Characteristics of good farm plan:
1. Plans should aim at efficient utilizationof all the available
resources on the farm.
2. Plans should be flexiblei.e. they should be adaptable to changing
environmental conditions.
3. Farm plans should be written, simpleand easily understandable.
4. Considering the available resources, farm plans should ensure
balanced production programmeconsisting of food crops,
commercial crops and fodder crops.
5. The production programmeincluded in the farm plan should aim at
improving soil fertility.
6. Farm plans should facilitate efficient marketingof farm products.
7. It should take into account up-to-date technology.
8. Farm plans should consider the goals, knowledge, training and
experience of the farmers, and their attitude towards risk.
9. Farm plans should avoid too risky enterprises.
10. Farm plans should provide for borrowing, using and repaying the credit.
Uniting Farmers for Sustainability with Balanced Promotion of Science,
Management, Technology & KCR 6

7. Steps in farm planning and budgeting:
Mnemonics: Social Science and Agricultural
Innovations for Destroying Poverty in Saurashtra.
(SSAIDPIS)
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8. Farm Planning Steps:
1. Statement of objective:
-Profit maximization while choosing enterprises
-Cost minimization while utilizing resources
2. Diagnosis of existing organization:
-Carefully identify weakness or defects in the current plan
-Take corrective steps and address the issues
-E.g.: Infertility issue in dairy cattle –how to rectify?
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9. Farm Planning Steps (Contd.):
3. Assessment of farm resource endowment:
•Land: Plan should specify the type of land, crops grown,
topography, soul type, texture, fertility status, soil and water
conservation methods.
•Labor: Indicate the extent of family labour availability
•Capital:
-Indicate working capital required for raising crops
-Indicate owned funds, borrowed funds, interest paid
-Mentioning Fixed capital is also required
•Organization: Assessing farmer’s knowledge, expertize, experience
in farming and confidence in adapting potential technologies.
•Irrigation sources: Sources of irrigation, area covered, period of
availability, quantity, crop demand, land accessibility to irrigation.
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10. Farm Planning Steps (Contd.):
4. Identification of enterprises to be included:
-Identify crops grown by the farmer and crops grown and crop
rotations followed in his locality.
-Estimating input-output coefficients of the enterprises to be included
-Work out cost and returns of inputs and outputs
5. Preparation of enterprise budgets: Estimating income, cost and
profitability of each enterprise in the plan.
6. Identification of risk: Listing out all types of possible risks faced.
Highlight the regularly occurring pests, diseases, drought
frequency, market price fluctuations, etc.
7. Preparation of a plan: Identify the scarcest resources and selecting
the enterprises yielding high marginal product. Repeat the process till
optimum combination of enterprises is reached.
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