India is ranked 2nd in terms of volumes of production with a 54.6% workforce engaged in agriculture and a whopping 90 Million plus farmers across the country. How do you manage such a large group of farmers and how decisions are taken collectively? Let’s understand what farm management is and how it’s practiced.
An area cultivated by a farmer or a group of farmers is a farm. It is the land devoted to raising of crops for food production or for pasture. The management refers to the planning required for implementing production activities so as to yield maximum returns.
Farm Management is a management method for organizing and carrying out farming-related decisions, such as those regarding crops, livestock, aquaculture, agroforestry, etc., to maximize productivity and profits. By allocating resources, devising strategies, and planning activities, it uses the resources at hand for lucrative, sustainable, and productive farming.
It can be defined as, “The science and art of optimizing the use of resources in the farm of farm-households and of achieving the optimal functioning of these systems in relation to household-specified objectives.”
It is a branch of Agriculture Economics that deals with the economics of farm units. Organization of land, capital for farm production, operations to achieve all these forms a few objectives of farm management.
5 Main objectives of Farm Management
The objective of farm management can be broadly classified into two aspects. One is the objective to increase net profit of the farm and the other to decrease costs.
One of the best ways to analyze profits over production is to determine the relative efficiency between agricultural input and output. This creates the principle of variable proportion providing farmers with the most efficient combination for production. We can also understand different input levels in comparison to the effect of change in output and determine the most profitable input output combination.
Analyze cost and profit:
Proper farm management techniques can provide cost and profit per hectare of land, opening up opportunities to analyze and make better decisions. It is necessary to study the cost per hectare and per quintal
Data about land, water, labor, plants, animals, and renewable resources are gathered to plan their exploitation in an efficient way that will produce the optimum result. The relative performance of different machineries in carrying out different farm operations needs to be evaluated.
Through soil management, pollution control, energy efficiency, crop protection, water management, nature conservation and livestock management, integrity and safety are maintained. There is a need to evaluate the appropriateness of the used farm resources and how sustainability can be advocated.
Good farm management provides various tools, data and engagement putting decision-makers in a better position. They need to figure out the ways to increase farm efficiency with profitability and be prepared for risks and uncertainties. It is necessary to implement various farming techniques suitable to one set of products and creating room for individual improvement and efficiency. One needs to check the most profitable crop production and livestock raising methods.
Principles of Farm Management
Various items necessitate a specially crafted farm management system. However, the fundamental tenet or guideline of farm management stays the same. These principles are subject to modification, addition, and deletion as and when a particular product requires it.
A principle is, “a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or a chain of reasoning”. Under farm management, it serves as a foundation for effective farming practices.
- Principle of variable proportion: a principle that deals with the amount of input that is required to derive a particular output efficiently are to be considered. Changes in different input levels will affect the change in output.
- Cost principle: here importance to cost for production is considered. There will be short-term and long-term costs that vary depending on the type of produce and gross return.
- Principle of substitution: there are various inputs available to the farmer and depending on the output required; he has to choose between the cost of inputs, the price of the product and the amount of substitution that has to be done.
- Opportunity Cost Principle: there are always replacements for farm inputs and this principle determines the difference in cost for the next best alternate input.
Farm management functions
Apart from how to produce, what to produce, when to produce and how much to produce, a farm manager works on the entirety of farming activities involving produce and livestock management.
- They are in charge of deciding what, how, when, and where to manufacture while adjusting to shifting economic and technological conditions and using their technical expertise to deliver products on schedule.
- They get involved in acquiring inputs for produce, machinery procurements, storage, marketing and where to sell. This also includes forecasting and adapting to changes in the market.
- They keep a track of business-related activities like capital acquisition, financial resource allocation, tax records, filing and regulatory compliances.
Factors related to Farming decisions
In recent times farming decisions are based on numerous factors relating to productivity and profits. Here are the top five factors that affect the same.
Farm management involves lots of planning, analysis and decision-making. Decisions taken by the farm managers will affect the entire farm. They have to make sure the right number of inputs at the right time is combined with the optimal utilization of resources. Therefore, farm managers must consider the level of importance at which their tasks rank to allocate and run tasks accordingly.
Many procedures and stages must be performed during farming, some of which are repeated, to handle both the growing of crops and the management of livestock. When handling such routine activities, a farm manager should give them importance. Frequency must be maintained in all aspects of animal feeding, and crop care, including irrigation, fertilizer inputs, etc.
Farming activities heavily rely on timing. Activities like seed sowing, crop input treatment, harvest, grazing, etc. should be carried out when the results will be greatest. The option a farm manager makes will depend on how important the chores are for which he or she must choose whether to act quickly or slowly. While a manager must act swiftly in response to changes in the weather or customer demand, there are times when he must maintain composure so that he may act with conviction.
While many elements influence the growth of the product, there are a few potential uncertainties for which the farm manager must find a practical and affordable response. The viability of a regular agricultural plan can be affected by variables such as weather change, animal sickness, water scarcity, changes in trends, and client desire, among others.
Advancement in the field of agriculture is at an astronomically rapid rate. Every day new technologies emerge providing solutions and improvements in farming practices, procedures, safety, quantity and quality. With this increasing number, it makes it difficult for the farm manager to opt for the best alternative while keeping cost and time in mind.
Technology and Farm Management
The increasing demand to feed the growing population and address climatic issues has fueled digital transformation in agriculture, at the heart of which lies data and connectivity. Emerging technologies like Blockchain, IoT, AI and ML have improved efficiency, increased yields, built resilience and sustainability into the agriculture ecosystems.
Tracex’s Farm Management solutions built on blockchain technology provides the required value addition. The collaboration of farmers, input providers, processors and other stakeholders play a key role in the data ecosystem. The blockchain platform provides seamless integration across the value chain to achieve increased productivity and profitability.
It is evident that a farm management system is required to obtain effective results at a lower cost. In terms of structural, legal, and productive components of the economy, the agricultural industry is currently undergoing a rapid shift. Farm managers who have a competent farm management system can provide their businesses with a competitive edge. It offers a well-structured system that makes room for productive, sustainable and profitable development.