Lecture 16 Farm Planning
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Farm planning is the organized decision-making process aimed at optimizing farm operations and maximizing net returns. It focuses on selecting suitable activities, resource allocation, and efficient production methods, which ultimately leads to improved farmer livelihoods. The document outlines the types, objectives, characteristics, and steps involved in creating an effective farm plan.
Lecture 16 Farm Planning
- 1. Lecture 16: Farm Planning 1
- 2. Farm Planning: • A successful farm business is not a result of chance factor. • Farming has become more complex business. • Definition: Farm planning may be defined as the process of making decisions regarding the organization and operation of a farm business so that it results in a continuous maximization of net returns of a farm business. • Making decisions: It shows the enterprises to be taken up on the farm; the practices to be followed in their production; use of inputs; investments to be made and similar other details. • A farm plan is a programme of total farm activity of a farmer drawn up in advance. 2
- 3. Importance of farm planning to a farmer 1. Choose different farm activities suited to the given farm conditions. 2. Look into the future and decide on suitable course of action. 3. Select appropriate enterprise combinations that results in the better use of resources. 4. Timing various jobs and operations for smooth conduct of operations without competition. 5. Avoid wastages that occur in the resource use. 6. Provide guidance and flexibility for ensuring better use and growth of the farm business. 7. Provide allocation of resources for producing the requisite products for marketing and household consumption. 3
- 4. Types of farm planning: • Simple farm planning: - Adopted for part of farm or for only one enterprise - Simple and easy to implement • Complete or whole farm planning: - Planning for the whole farm - Adopted when major changes are planned - e.g.: Establishing a green house 4
- 5. Objectives of farm planning: 1. The immediate objective of farm planning is to maximize the annual net income sustained over a long period of time. 2. The maximization of net income through improved resource use planning. 3. The ultimate objective of farm planning is improvement in the standard of living of the farmer. 5
- 6. Characteristics of good farm plan: 1. Plans should aim at efficient utilization of all the available resources on the farm. 2. Plans should be flexible i.e. they should be adaptable to changing environmental conditions. 3. Farm plans should be written, simple and easily understandable. 4. Considering the available resources, farm plans should ensure balanced production programme consisting of food crops, commercial crops and fodder crops. 5. The production programme included in the farm plan should aim at improving soil fertility. 6. Farm plans should facilitate efficient marketing of farm products. 7. It should take into account up-to-date technology. 8. Farm plans should consider the goals, knowledge, training and experience of the farmers, and their attitude towards risk. 9. Farm plans should avoid too risky enterprises. 10. Farm plans should provide for borrowing, using and repaying the credit. Uniting Farmers for Sustainability with Balanced Promotion of Science, Management, Technology & KCR 6
- 7. Steps in farm planning and budgeting: Mnemonics: Social Science and Agricultural Innovations for Destroying Poverty in Saurashtra. (SSAIDPIS) 7
- 8. Farm Planning Steps: 1. Statement of objective: - Profit maximization while choosing enterprises - Cost minimization while utilizing resources 2. Diagnosis of existing organization: - Carefully identify weakness or defects in the current plan - Take corrective steps and address the issues - E.g.: Infertility issue in dairy cattle – how to rectify? 8
- 9. Farm Planning Steps (Contd.): 3. Assessment of farm resource endowment: • Land: Plan should specify the type of land, crops grown, topography, soul type, texture, fertility status, soil and water conservation methods. • Labor: Indicate the extent of family labour availability • Capital: - Indicate working capital required for raising crops - Indicate owned funds, borrowed funds, interest paid - Mentioning Fixed capital is also required • Organization: Assessing farmer’s knowledge, expertize, experience in farming and confidence in adapting potential technologies. • Irrigation sources: Sources of irrigation, area covered, period of availability, quantity, crop demand, land accessibility to irrigation. 9
- 10. Farm Planning Steps (Contd.): 4. Identification of enterprises to be included: - Identify crops grown by the farmer and crops grown and crop rotations followed in his locality. - Estimating input-output coefficients of the enterprises to be included - Work out cost and returns of inputs and outputs 5. Preparation of enterprise budgets: Estimating income, cost and profitability of each enterprise in the plan. 6. Identification of risk: Listing out all types of possible risks faced. Highlight the regularly occurring pests, diseases, drought frequency, market price fluctuations, etc. 7. Preparation of a plan: Identify the scarcest resources and selecting the enterprises yielding high marginal product. Repeat the process till optimum combination of enterprises is reached. 10