Horti-Business Management (2+0)

Farm management - decision making

• The farm manager has to take decisions on several aspects for profitable operation of the farm. Decisions have to be taken regarding production, marketing and administration. These three segments are interlinked and decision making is also interlinked. In this lecture we shall look into the type of decisions that the farmer has to take and the micro-economics principles that could used for decision making.
1. Production decisions: Basically the farmer has to decide the following;

• What to produce - The farmer has to decide the crops and allied enterprises that he wishes to produce in the farm. It depends on many factors like soil type, water availability, other resources that the farmer can mobilize, agro-climatic factors in the region and above all the needs of the market. Presently the emphasis is on market oriented agriculture. It would be more beneficial to the farmer if he produces the crop and variety preferred by the consumers, since he can sell them at a good price. Based o the above factors a farmer can narrow down the choice of crops and allied enterprises and then identify the optimum enterprise combination that would generate maximum net revenue.
• When to produce - The timing of release of output in the market is important since generally there is a glut in the market during harvest season and it leads to fall in price and eventually the low profit / loss to the farmer. Natural factors also influence the choice of cultivation of crops during a season.
• How to produce - The farmer has to decide the choice of technology for crop production. The farmer could go for organic farming or integrated approach using both organic and inorganic inputs. The choice and level of different inputs, the mode and timing of their application influence the yield.
• How much to produce - The area under a particular crop, size of poultry / livestock enterprise etc., influences the quantum of output. The size of enterprises directly influences the expenditure for cultivation and the farmers should be able to meet them from his own or borrowed resources.
In the case of perennial crops like fruit trees, the decisions have a long term impact on productivity and returns.
2. Managerial Decisions

• Managerial decisions in a farm include human resource management (hiring and supervision of casual and permanent labour), utilization of funds, accounts and record maintenance, financial transactions, accessing information required for farm management etc.
3. Marketing Decisions

• Marketing decision includes buying of inputs and selling of outputs. Buying decisions address the questions of when to buy? where to buy? how to buy? and how much to buy?. These decisions are important in determining the profitability of the farm business. Similarly the farmer is also confronted with the questions of when, where and how, to sell his produce? Marketing decisions play a crucial role in making the farm business a success or failure.