Introduction to

Farms & Farm Management

AG ECON 302

Instructor:
Dr. Janailin S. Papang
&
Dr . Sanjay
Department of Agricultural Economics
CCS Haryana Agricultural University, Hisar-125004
 CONTENTS
S. No. Particular Slide No(s)
1. What is farm management? 3
2. Scope & Objective 4-5
3. Decision to be made by farmer 6
4 Relationship with other sciences 7
5. Farms : Meaning & Definition 8
6. Classification of Farms/farming 9
7. Types of Farming 10-19
8. Factor determining types 20-21
9. Systems of Farming 22-27
10. Size of farms, factors affecting size of farm 28-32
11. Suggested Readings 33
 What is farm management?
Meaning: Farm management comprise of two words, “farm” and “management”
Farm= a piece of land where crop and livestock enterprise are taken up under a common management
Management = the act or art of managing.

Definition: Gray states that, “The art of managing a farm successfully, as measured by the test of
profitableness, is called farm management”

Sub branch of economics which deals with, “Decision making on the organisation and operation of a farm for
securing: Max. continuous Net Income + Welfare of farm family”
i.e.,

&

3
 Scope
❖ Farm management fall within the scope of “Microeconomic” because primarily it is concerned with
allocation of resources in a single farm.

❖ It covers aspects of a farm that has bearing on Economic efficiency (maximum net Returns) :

❖All 4 Factors of Production best utilization

❖What crops/varieties are to be grown

❖What enterprise should one follow or combine

❖Dosage of fertilizers

❖Labour

❖Capital

❖Types of implements to be used

4
 Objectives of farm management

1. Highest possible continuous Net Returns and maximization of family satisfaction

2. Studying existing resources

3. Finding out where the resources are being utilized in less than optimum manner

4. To explain the procedure of correcting this deviation

5. To work out cost and returns on individual enterprises and on the farm as a whole

5
 Management Decision (MD) to be made by farmer
Organizational MD Administrative MD Marketing MD

A) Operational management decision ✓ Financing of farm business ✓ Buying- of inputs/resources with least
cost, sources of supply, time, and
✓ What to produce ... selection of ✓ Preparation of work schedule and their quantity.
Enterprises based on resource
availability supervision
✓ Selling- of output/produce- what to
✓ How to produce… selection of most ✓ Accounting and book-keeping sell, where to sell, whom to sell, when
cost efficient methods
✓ Adjustment with government to sell, how to sell and so on.
✓ How much to produce…. How much
resources to be dedicated to individual programs and policies
Enterprise

B) Strategic management decision

✓ Selecting appropriate size of farm
✓ Estimating labour and machinery
requirement
✓ Estimating credit needs
✓ Planning additional building
✓ Planning soil conservation and
reclamation practices to be adopted
✓ Irrigation facility to be installed
6
 Relationship with other Sciences
A. Physical and biological science
1) Agronomy - Crop cultivation practices
2) Soil science and Chemistry- Composition/ structure/ deficiency in soil and ways to correct it
3) Botany and physiology- gives knowledge about crop, its species and its ecology
4) Plant breeding - Breeding new varieties, saving indigenous ones
5) Animal husbandry – breed of animals, feeding & maintenance practices
6) Forestry- tree species and varieties
7) Agri. Engg – use, maintenance and efficiency of implements and machineries

B. Other social science

1) Psychology- understanding choice, behaviour, motivation and attitudes of decision maker
2) Sociology –decision maker lives in a social matrix, thus decisions are influenced by customs, habits and social values
e.g. Rural sociology
C. Political science – Legislation and political decisions of govt. affects farmer’s decisions.
e.g. land ceiling, minimum and maximum price, food parks, land utilization

D. Statistics- provides methods and procedure for data collection and analysis

7
 What is a Farm?

✓ A farm is an area of land devoted primarily to agriculture

✓ Primary objective of producing food
✓ Specialized units:
– Vegetable farms
– Fruit farms
– Dairy, pig and poultry farms
– Ranches, feedlots, orchards
– Plantations and estates
✓ Includes the farmhouse and agricultural buildings as well as the land

✓ Farmstead = farm + farm buildings

8
 How are Farms/Farming classified
Johnson

Type System
Refers to nature and degree of products (enterprise) and their
combination
When farms in a group are quite similar in: Ownership
&
✓ Proportions (degree of combination) of the crops and Operationship
livestock &

✓ Methods and practices.

1. Specialized 2. Diversified 3. Mixed 1. Cooperative 2. Collective 3. Capitalist

4. Ranching 5. Dry Farming 4. State 5. Peasant

9
Types of farming

1. Specialized
2. Diversified
3. Mixed
4. Ranching
5. Dry farming

10
 1. Specialized farming
50% or more of income is derived from one single source
or enterprise
Eg: Orchard/paddy/sugarcane/poultry/sheep/fish farming
Reasons: (i) Assured income, (ii) Suitability to area, and
(iii) Relative profitability

Advantages Disadvantages
✓ Better use of land ✓Greater risk -crop failure
✓ Better marketing ✓Affecting Soil health
✓ Better management ✓Farm returns are risky and not continuous
✓ Less equipment and labour ✓General knowledge become lesser
✓ Costly but efficient machinery ✓Resources not used efficiently or left idle
✓ Efficiency and skill

11
 2. Diversified farming
No single product source of income equals as much as 50%

Advantages Disadvantages
✓ Less risk ✓ Marketing becomes difficult
✓ Supervision becomes ineffective
✓ Proper utilization of resources
✓ Maintenance and purchase of various equipment
✓ Regular returns/income all year round become difficult
✓ Leakages of resources gets unnoticed

1
 3. Mixed farming
Crop production + Significant livestock raising
(Livestock contributes10-49 % of Gross Income)

eg. Crop + Poultry/dairy/fishery/bee-keeping

Advantages

✓Soil fertility and soil health (organic manure) ✓ Intensive cultivation

✓Balanced labour load ✓ Higher returns

✓Employment all year round ✓ Income stability of household

✓ Proper use of farm by-products

13
 4. Ranching

❖ Raising herds of animals on large tracts of land

❖ Livestock grazes on natural vegetation

❖ Multiply naturally

❖ Uses public land

❖ Eg: Horses, Cattle and Sheep

❖ Argentina, Uruguay, and Brazil: Pampas

❖ Central USA: Prairie

❖ Australia

14
 4. Ranching

Australian Shepherds

USA

15
Rodeo/ Cowboys/ Cowherders Cowgirls / Jillaroos
Elk, Bison, Ostriches, Emus, Alpacas rearing Causes global warming
Threat to biodiversity Americas and Australia
transport livestock to industrial slaughterhouses
 5. Dry farming
✓ No irrigation
✓ Farming is predominantly rain-fed
✓ Depending on rainfall dry farming is categorized as:
a) Dry farming (<750 mm annual rainfall) – frequent crop failure, moisture conservation necessary
b) Dry land farming (>750mm but <1150 mm annual rainfall)- crop failure less frequent, moisture conservation necessary
c) Rainfed farming(>1150 mm annual rainfall)- humid region, drainage problem, control of soil erosion

❖ Farm management Problems

1. Soil moisture - Dry farming, Dry land farming
2. Preventing runoff - Rainfed farming
3. Selecting Crops:
❖Drought resistant : Reduces transpiration & Stops growing
during severe shortages (SORGHUM)
❖Drought evasive : Achieve their main growth when
heat and drought conditions are not severe
 Factors determining Type of Farming
Physical factors- Climate, soil, topography, etc.
Within the choices established by physical factors

Economic factors
❖ Marketing Costs
A low share to the producers will cause little preference to that product in relation to high producers share.

❖ Availability of Labour and Capital

Farm enterprises requiring intensive operations require a good amount of labour involvement and capital
investment. Labour and capital intensive farming in a region brings about migration of labour from one
region to the other region.

❖ Land Value
Low land values attract the enterprising farmers from high land value areas: New type of farming
Ex. farmers from coastal AP buying low value lands in parts of Krtk introduced intensive cotton and rice
farming
20
 Factors determining Type of Farming
❖ Cycles of Over and Under-production: low/ high prices.
This results in speculation and uncertainty in the type of crops to be grown.
This phenomenon gives rise to the Cob Web Theorem: Ex: Cotton, tobacco, etc.

❖ Competition between Enterprises

Vegetables/Exported crops

❖ Personal Likes and Dislikes of the Farming Groups

Personal preferences either due to traditional values or attachments

❖ Prevalence of Pests and Diseases

The occurrence of pests and diseases on an endemic fashion in a region will ruin or extinguish the entire
type of farming and gives rise to new type of farming.
In Guntur and Prakasam districts of Andhra Pradesh during 1984-86: Whitefly attach reduced cotton area
by 40 % and gave rise to pulse and oilseed crops farming in this cotton belt.

21
 Systems of farming

1. Cooperative
2. Collective
3. Capitalist
4. State
5. Peasant

22
 1. Co-operative farming
✓ Farmers voluntarily pool resources and cultivate land under elected management
✓ Retain land right
✓ Profit Distribution : Land + Wages earned
Co-op Better Co-op Joint
➢ Ownership & Operationship- individual ➢ Ownership & Operationship - common, Joint
cultivation
➢ Only some jobs are done jointly ➢ Ownership: Dividend in proportion to the value of his
land.
➢ Members get wages for daily labour

Co-op Tenant Co-op Collective

➢ Ownership & Operationship – common ➢ Similar to that of a co operative joint

➢ Land held by society, divided and leased to members ➢ Land right : No
❖ Society: Credit, seeds, manures, marketing of produce, ➢ The profits are paid to the members in proportion to
etc. the work & annual capital contributed
➢ Tenants pay rent & can produce anything & sell as per
their wish
23
 2. Collective farming
❖ Member surrender their
✓ Land,
✓ Livestock and
✓ Deadstock to the society

❖ An elected management committee elected

✓ Allocation of work
✓ Distribution of income
✓ Marketing surplus
✓ Main source of income is through labour earnings

2
 3. Capitalist farming
❖ People who are landlords
❖ People who are entrepreneurs: Bought, leased/rented land

❖ For running agriculture as a business

❖ Profit motive

❖ Hired labour use > Family labour

❖ Advance technology

❖ Profits are reinvested

2
 4. State farming
➢ Farms are managed by government officials
➢ Worker: Paid wages
➢ Research can be facilitated under state farming
➢ Products, by products used, sold

5. Poor Peasant
3 types of rural peasants: Rich, Middle and farming
➢ Whole family is engaged
➢ Work is divided among family members: care of the livestock and looking after the kitchen garden and
poultry
➢ The peasants work more during busy seasons of sowing and harvesting

✓ Renting land is also prevalent in case of poor peasants

✓ Supplement income by working a laborers
26
 Summary

Systems of farming Ownership Operations

Individual
Co-op Better Individual
Collective
Co-op Joint Individual
1 Individual
Co-op Tenant Collective
Collective
Co-op Collective Collective

2 Collective-farming Society or State Society or State

Capitalist farming Individual Individual

3

State farming State Paid management

4

Peasant farming Individual Individual

5

27
 Size of farm
In general : Physical area
Economics : Volume of production or Value of production.

❖ Minimum Efficient Size

✓ Keep the farmer fully employed
✓ Income sufficient to sustain himself and his family

❖ Economic Size
✓ All fop wholly within the family farm
✓ Somewhat larger than the minimum efficient
✓ Reasonable standard of living to the family
✓ Producing sufficient to support himself and his family in a reasonable comfort after paying his necessary expenses.
✓ It is not easy to determine the economic size of the farm for the country as a whole. It will vary from place to place.
✓ Fertility and location of the farms,
✓ Irrigation facilities,
✓ Nature of crops grown,
✓ Amount of capital available for investment and managerial capacity of the farmers. 28
 Types of Farms according to FARM SIZE

S. No. Farm Size (ha)

1. Marginal < 1.00

2. Small 1 - 2

3. Semi- Medium 2 - 4

4. Medium 4 - 10

5. Large > 10

29
 Some interesting statistics
Land fragmentation
Marginal Small Semi-medium Medium Large

2.54
5.62 13.09

17.07
31.06
% s hare

19.28
28.30

49.29
17.54

17.48

1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2010-11 2015-16

Note: Number of marginal farmers in India has increased over time

30
 0.18

Kerala
31

Lkdwp
D&D
Bihar
Tripura
J&K
Pudu
UP
Average size of holdings (ha.), Agri. Census, 2015-16

TN
WB
Goa
UK
Some interesting statistics

AP
Odisha
HP
Telangana
1.08

All India
Assam
Sikkim
Manipur
Jharkhand
Chd
Mizoram
Chhattisgarh
Meghalaya
Maha
Krtk
D & N Haveli
Delhi
MP
A & N Islands
Gujarat

2.22
Haryana
Raj

3.35
Aru P

3.62
Punjab

5.06
Nagaland
 Some interesting statistics
Average farm size

Haryana SC India

2.75

2.28 2.22

1.98 1.58

1.08

1970 -71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2010-11 2015-16

32
 Factors affecting farm size

❖ Money at hand : Less/More

❖ Density of population : High/Low

❖ Law of inheritance : India

❖ State laws : Land ceiling

❖ Climate : Dry/Wet

❖ Topography : Plain/ Undulated/Mountainous

❖ Nature and source of irrigation : Perennial/Scanty/Canal/Rain/Groundwater

❖ Nature of crops grown : Plantation/vegetables

❖ Nature of farming : Capitalist/peasant

❖ Managerial capacity : High/low

33
Suggested Readings:
1. Johl and Kapoor: Fundamentals of Farm Business Management
2. Raju, VT: Economics of Farm Production and Management
3. Reddy, Ram, Sastry, Devi: Agricultural Economics

SYMBOL OF TRUST