UNIT 1.

1
FARM MANAGEMENT AS A WAY TO
INCREASE PROFIT

Objectives ! To understand the concept of farm and farm

of the Unit enterprises
! To understand the concept of farm management
and its importance in farming;
! To identify and discuss some of the more
important functions of farm management
! To introduce extension workers to likely
farming objectives and how they affect the
decision-making process

Instructional Contents

Session 1.1.1 The Concept of Farm and Its Enterprises

Session 1.1.2 What is Farm Management?
Session 1.1.3 Why is Better Farm Management
Important?
Session 1.1.4 What are the Farmer's Objectives?
Session 1.1.5 How do Farmers Decide?
Exercises No 1, 2 and 3
Handouts Handout A
PPT Presentation PPT 1.1.1

PPT 1.1 1
The Concept of Farm and Its
Enterprises
A farm is a piece of land on which a farm
household undertakes agricultural
activities as part of their livelihood. It
may include structures such as buildings,
wells, irrigation channels, fences, as well
as crops and livestock and a house in
which the farm family live.
The essential features of a farm are:

⇒ The farmer is the decision-maker and

manager

⇒ Productive resources (land, labour

and capital)

PPT 1.1 2
Within a farm, several activities can
be identified. These activities are
called farm enterprises.

Pineaple land (0.75 acres)

m2 m2 m2SessionMango
1.2.2 Definition
and of(0.5
Animal Farm Enterprise
acres)

Multi-purpose drying pavement Piggery(100 m2)

Farmer’s House

Warehouse
Vegetable Farm

Ornamental Garden
A Layout of Farm with Several Enterprises

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Inputs are the things put into the
production process: land, labour
planning and managing activities, seeds,
feed, fertilisers, insecticides, etc.)
All the things that go into agricultural
production are inputs. The outputs are
the crop and livestock products the
farm produces. Each farm has its own
inputs and outputs and sometimes the
output of a farm enterprise is the
input of another.

Production Process

INPUT OUTPUT

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 What is Farm Management?
Farmers are at the same time cultivators
and managers. Farm Management can be
defined as the activity that combines
planning, implementation and operation of
a farm.

Farmers need to decide on:

⇒ What types of crops and livestock
activities

⇒ How to best use the resources available

for production and post harvesting
operations

⇒ Which is the most appropriate technology

to use; and

⇒ Where, to whom and at what prices to sell

the products
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Farm management is about doing
something with the limited resources
available to the farmer

The functions of management are:

PLANNING
decisions to be made
based on resources
available and personal
experience

IMPLEMENTATION
Resulting in
NEW Purchase of inputs and
resources necessary to
INFORMATION
implement the plan

CONTROL
monitoring results,
recording information
and taking corrective
actions

PPT 1.1 6
 TIME FOR EXERCISES !!!

Training Exercise No. 1

COMMON PROBLEMS FACING FARMERS

Trainees’ tasks:
The trainees should work in pairs and list what
they consider to be the main problems facing
farmers in their communities. The main problems
should be ranked according to importance and
should be arranged in two main categories:
organization and operations.

Training Exercise No. 2

WHAT IS FARM MANAGEMENT?

Purpose of exercise:
To understand the role of farm management as
related to the experience of extension workers in
the field.
Trainees’ tasks:
The trainees should work in pairs and list what
they consider to be the main tasks in which
farmers are involved. The tasks should be arranged
into two main categories: planning and operations.
PPT 1.1 7
 Training Exercise No. 3

QUALITIES OF A SUCCESSFUL FARMER

The aim of this exercise is to encourage trainees
to think about what makes a farmer successful in
managing his or her farm. The exercise is designed
to provide an opportunity for extension workers to
draw on their field experience and open a
discussion amongst the training participants.
Trainees’ tasks:
1. The worksheet is distributed and trainees are
asked to arrange the suggested characteristics in
order of importance (1 = very important; 3 = less
important).
2. The trainees should work in groups and should
reach some consensus on what they regard as the
most desirable characteristics of a successful
farmer.
3. Suggestions are written down.
4. Discussions follow.
Some of the most important characteristics that
are usually reported are listed below. This list is
not exhaustive. Participants may come up with
additional points. The participants may need some
assistance when prioritising the qualities listed.

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 Why Better Farm Management?

Farmers operate with a dynamic and constantly

changing environment in which changes are linked
primarily to market-related factors, such as:

Prices: a change in the prices for products or

outputs will affect the overall farm’s profitability.

Resource availability: supply problems (costs,

availability) may limit the use of fertilizers and
forages, etc. Farmers then have to re-evaluate
their decisions in relation to the availability of
resources.

Technical relationships: a new variety of cassava

may become available which produces a yield
similar to currently available varieties, but with
better disease resistance, lower fungicide
requirements and, hence, lower production costs.

Changing institutional/social relations: Factors

concerning access to markets/ financial
institutions, government support and private
sector linkages also affect the performance of the
farm.
PPT 1.1 9
 What are the Farmer's Objectives?
Farmers tend to have a number of objectives:

" profit maximisation

" increase output/sales
" reduce costs
" avoid borrowings
" survival
" attain a specific standard of living
" transfer the business to the next generation
" ensure food supply to the family or to the village

These objectives guide their choice between

alternative activities
Profit is the difference between the value and
the cost of the production of a product. It
represents the farmer's gain.

Remember: In the long-term, farm profit

must be sufficient to cover family
expenses and production costs related to
the farm.
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 How do Farmers Decide?

Farmers continually make decisions and it is the

role of extension workers to support them in doing
so. The steps taken in the decision-making process
are summarized as:

Identify the
problem and collect
data/information

Follow-up and Identify and

monitor the appraise
decision THE DECISION-MAKING alternative
PROCESS solutions

Implement the Make the decision -

decision adopt the best
alternative

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 Time horizons when making decisions in
agriculture

Short-term. are operational decisions concerned

with the daily organization of farm operations such
as sowing, weeding, fertilising, harvesting and
storage, culling of stock, veterinary interventions,
etc.

Medium-term. are decisions concerned with the

annual organisation of the farm e.g. preparing the
cropping plan, deciding on the amount of labour to
use and whether to introduce new crop varieties
and animal husbandry practices.

Long-term: are decisions relate to the long-term

nature of the farm e.g. whether or not to expand
farm size through purchasing or leasing land; and
whether or not to construct buildings and/ or
purchase of machinery and equipment.

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 Management
Production Decisions

WHAT TO HOW TO HOW MUCH TO

PRODUCE? PRODUCE? PRODUCE?

Market factors
• Market Size • Consumer Preference • Market Size
• Market Location • Peak Demand Periods • Market Sensitivity
• Pricing Structure • Presentation/Packing • Contractual Constraints

Agronomic Constraints
• Climate • Varieties • Irrigation
• Soils • Production Cycles • Crop Rotation
• Water • Production Systems

Management Constraints

• Personal Preference • Investment • Land

• Management Skills Requirements • Labour
• Capital

PPT 1.1 13