Farm management involves making strategic decisions about how to organize and operate a farm to maximize sustainable profits. There are three main types of farm management decisions: organizational decisions, which involve determining what and how much to produce, as well as strategic decisions about farm size and infrastructure; administrative decisions around financing, supervision, and record keeping; and marketing decisions regarding buying farm inputs and selling farm outputs, including when, where, and to whom to sell. Making good decisions is essential to the sustainable profitability and success of a farm business over time.

1. Lecture 11: Farm Management
Decisions
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2. Farm Management:
• What is ‘farm’?
• A piece of land with a fixed boundary wherein crops
are raised or animals are reared for economic returns.
• What is ‘management’?
• Co-ordination of all the activities in farming from land
preparation to harvesting for realizing sustainable
profits.
• Farm management: It can be defined as a science
dealing with judicious decisions on the use of scarce
farm resources, having alternative uses to obtain the
maximum profit on sustainable basis.
• Or, organization and operation of farms with a view to
make continuous profits.
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3. Farmers and decision making:
• Decision-making is central to farm management.
• Each decision has an impact on the farm and on the
farm household.
• Even deciding to do nothing is a decision and has an
impact.
• The more a farmer is aware of the decision-making
processes that affect farm and household, the more
sustainable the enterprise will be and the more
likely it will be profitable and sustainable.
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4. Farm Management Decisions
• Farm management seeks to help the farmer in deciding
problems like what to produce, how much to produce, how
to produce & when to buy and sell and in organization and
managerial problems relating to these decisions.
• Farm management decisions can be classified into:
1) organizational management decisions,
2) administrative management decisions and
3) marketing management decisions
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6. Organizational Management Decisions:
1. Organizational Management Decisions:
1A. Operational management decisions
 involve less investment, made more frequently
 effect is short lived, reversed with less cost
 what, how and how much to produce?
 a.k.a tactical decisions
1B. Strategic management decisions
 involve heavy investment, made less frequently
 effect is long lasting, cannot be reversed
 size of farm, machinery, farm building construction, etc.
 a.k.a basic decisions
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7. 1A. Operational management decisions
- What to produce?
 to be decided before the season in tune with available resources
 whether to produce crop or to rear livestock or try both
 should aim at profit maximization
- How to produce?
 manner in which the resource combinations are to be made
 should aim at cost minimization
- How much to produce?
 level of inputs to be used
 finding our optimal use of input and output
 MVP = MIC (optimal input level) and MR = MC (optimal output level)
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8. 1B. Strategic management decisions
- Size of farm:
 determine pros and cons of operating enterprises on various scales
 influenced by various economic, social, natural, and policy factors
 should aim at profit maximization
- Machinery and labour programme:
 appropriate resource combination to produce output at less cost
 identify resource substitutes
- Construction of farm buildings: Involves heavy
investment and heavy penalty – farmer has to tread cautiously
- Irrigation, conservation and reclamation programmes:
 lasting effect on farm business
 should choose most appropriate and economical method
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9. 2. Administrative management decisions
- Financing the farm business:
 whom to borrow, when and how??????
- Supervision:
 keep a close watch for getting desired results
- Accounting:
 farm records provide control over the farm business
- Adjusting the farm production programme:
 allocation of farm resources should be consistent
with the government policies.
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10. 3. Marketing management decisions
Buying and selling decisions:
- Buying:
 buy inputs at least cost
should decide agency, timing and quantity to be purchased.
- Selling
 should try to adjust time of selling
 should try to harness all the utilities (i.e. form, place, time,
possession, information)
 what to sell? When to sell? Where to sell? and whom to sell?
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