Farm Planning
Means Assessing the Implications of Allocating Resources in a Particular way
before deciding whether to act. Therefore it is the Foundation of Management.
TABLE OF
CONTENT
INTRODUCTION
Purposes of whole farm planning
Improve conservation and water quality protection
Integrated Economics and Environment
Consider quality of life
Essential goals for a whole farm plan
Essential qualities of the whole
Farm planning process
Steps in whole Farm Planning and Budgeting
Essential Contents of A Whole Farm Plan
BUDGETING
These are also advantage of
budget
Budgeting involves three main steps
Summary
REFERENCES
Farm Planning means assessing the implications of
allocating resources in a particular way before deciding whether to act,
therefore it is the foundation of management. Farm planning can be defined as the
preparation of an operational programme for a farm which will ensure the
conservation of land and other resources and the efficient use of production
factors there by increasing the net income and satisfaction of the farmer.
Without setting the objectives and line of action to be followed, there is
nothing to organize, direct and control in the organization of farm business.
Planning is deciding in advance how
to manage production problems viz what to produce, how to produce, when to
produce finical problem viz how to borrow, how much to borrow when to borrow,
where to borrow, so it the day to day activities of running the farm.
Farm
planning bridges the gap from where we are to where we want to go it involves
the process of thinking before doing. Farm planning is a programme of total
activity drawn up by the farmer in advance.
Planning
is not often required in traditional farming because farmers practice the
agriculture which is suitable to the soil type. However as new technologies are
introduced, there is need to combine and recombine available resources to
achieve higher profits. So farm planning are particularly required when there
are limiting factors such as land, capital, and labour, the aim being to
maximize returns to the limiting factors.
However whole farm planning (according
to loni kemp 1996) is a process to pull together decision making about
environment, economic and production process, it brings the entire farm and all
its resources into the thought process. The purpose is to help farmers achieve
their goals while at the same time enhancing natural resources and the
environment. It is based on this concept that a farmer can make better decision
on relevant information about available resources, alternative solutions and
potential impacts. Whole farm planning solve the problem of a single purpose
farm plans by which a farmer has a plan for its highly erodible acres, another
for the feedlot, another for manure management, another for pesticide, another
for wetlands. And may be one for wildlife or woodlot. Too often these plans
solve one resource issue at the expense of another, too often such plans are
written by agency personnel and presented to the farmer with minimal
interaction.
Whole
farm planning is a solution that seems to be at the hub of a wheel, catching
the interest of different groups.
PURPOSES OF WHOLE FARM PLANNING
The major themes that attract people
to the concept of whole farm planning are the opportunity to
1. Coordinate regulations
2. To promote conservation and water
quality protection
3. To integrate economics with
environmental concerns
4. To promote sustainable agriculture
5. Consider quality of life
1.
Coordinate regulations
Regulations could be imbedded into the whole farm
planning process, farmers had to cope with an increasing of government regulations
in recent years, each designed to deal with one problem at a time a successful
implemented whole farm plan could be the tool to co-ordinate compliance with
these regulations. Farmers could rest in confidence that their plans document
full compliance with all rules that apply to them.
For
this to happen agencies would have to work together, indeed, better
communication between agencies is an additional benefit of a whole farm
planning approach designed to coordinate regulations relating to agriculture
regulation programs to control farms problem programs for Erosion, wetlands,
pesticides, feedlots, wildlife nutrients.
2. Improve
conservation and water quality protection
The public is increasingly aware of
the impact on water quality from agriculture. Runoff of eroded soil, animal
wastes, fertilizer or pesticides is often the cause of serious pollution for
both surface water and groundwater, realizing that these pollution sources are
too complex and numerous to regulate, policy makers are searching for a
different means to encourage better farming practices, by giving control back
to the farmers, whole farm planning can provide the forum for evaluating
problems and implementing site-specific solutions. Instead of making separate
effort in teaching farmers on how to reduce source of runoff, whole farm plan
would coordinate programs relating to agriculture, the plan will encourage to
search for best solutions for multiple problems.
3. Integrated
Economics and Environment
Sometimes media portrays farmers as
being concerned with production and profit, infact most farmers care deeply
about land and most environmentalist wants a thriving agricultural economy.
Whole
farm planning encourages a look at all options available, including information
about relative costs, so that a farmer can choose the least cost options that
meet their goals. Ideally the whole farm plan would also be a means to increase
profits. A whole farm plan can help farmers keep records to guide ongoing
management and make adjustments to practices.
4. Consider
quality of life
An important element missing from single purpose farm plans is
inclusion of the farmer’s personal goals and intimate knowledge of their own
farm. History, opportunity, instinct and common sense can only come from the
farmer himself or herself. Instead of assuming that maximum production or more
income is the only goal., a whole farm plan provides the chance for the farm
family to articulate their real goals, whether passing on the farm to the next
generation, creating beauty on the land, reducing debts such a process might
even help more people choose farming as a way to make a living.
ESSENTIAL GOALS FOR A WHOLE FARM PLAN
A whole farm plans should aim at
least five goals for the farm. These essentials goals are:
1. Improved
farm profitability
What makes whole farm planning
different from past approaches is that improving farm profits is front and
center. Where environmental concerns are the driving force, the process should
help farmers find solutions that actually save money, increase profits simplify
the work.
2. Reduce
Water Pollution
The main driving force behind
interest in whole farm planning is the need to reduce non point source
pollution from agriculture. Farm families themselves are often the first
victims of contaminated water supplies if a water well becomes fouled with
nitrates or pesticides and volatilization into the air, to regulate each source
of pollution, programs are lunched by the government which whole farm plan
could be the best means to achieve cleaner water supplies.
3. Reduce
Soil Erosion:
Most farmers have had their erodible lands identified
and the Revised universal soil loss equation provides equitable evaluation of
different management practices on different sites. Since 1985, many farmers
developed and implemented consideration compliance plans for their highly
erodible acres, as a precondition of receiving U.S. commodity program benefits.
4. Improve
Management of Nutrients
Nitrogen is a necessary soil
nutrient for crop, but its easy solubility in water when over applied lead to
pollution of drinking water. Phosphorus is another necessary nutrient that
causes problems when an excess runs into surface water and leads to algae
growth. Bacteria and viruses form manure contaminate drinking water supplies.
5. Improve
management of pests and pesticide:
Pesticide that move from the
intended field, whether by runoff,
leaching or volatilization are an economic loss to the farmer and a threat to
the environment. Farmers and their families face additional health risk due to
daily exposure and accidents.
So,
whole farm planning can help farmers consider several approaches to improving
pest management to reduce or eliminate pesticide risks.
* The first step is to make sure that
good housekeeping practices prevent accidents and over application.
* Next step is to reduce the ultimate
use of pesticides by incorporating principles of integrated pest management.
ESSENTIAL QUALITIES OF THE WHOLE FARM
PLANNING PROCESS
How something is done is usually
just as important as the final product. These are key qualities of a good
planning process.
1. The
Farmer is in the Charge: It is critical that a whole farm plan should not
be prepared by an expert and handed over to the farmer as a done deal. Such a
plan is not likely to be implemented. The farmer must be involved in learning
about problems.
2. The
Farm Family Sets Goals for the Farm
It is essential that the farmer
identify the specific goals they intend to reach, ranging from environmental
goals, Economic goals, family goals and social goals. Separate short-term and long-term
goals stated goals should be meaningful to the farmer, and somehow be measured
with either quantitative or qualitative measures so that as the plan is
implemented the reason for taking each step remains clear.
3. The
Entire Farm is Included: The essence
of whole farm planning is to integrate all resource issues with the farm
system. All plans will necessarily be include, some kind of assessment of
resources which should include a look at the entire farming operation.
4. Problem
areas are clearly identified: the first step to any healing process is to
admit what the problem is. A core purpose of a whole farm plan is to help
farmers name the concerns that need to be addressed. Whole farm planning seeks
to identify a pattern of problems in the hope that new solutions will emerge.
5. Alternative
options are Considered: The heart and
soul of whole farm planning is the exploration of alternative solutions to the
named problems of the particular farm. Technical assistance will surely be
beneficial in offering information to farmers on multiple solutions including
innovative ideas they might not have thought of.
6. The
farmer Develops an Action Plan with Adequate Timelines: Good
intentions without an action plan are destined for oblivion. It is essential
that the selected options be written into an action plan by the farmer himself
to which the farmer makes some kind of commitment and carefully reflecting time
to sit the task. Without this step, it is not really a plan but only a list of
ideas.
7. The
Planning process should be Educating, Encouraging and Easy to understand: Agencies should continually evaluate the planning
process and format for relevance and appeal to farmers, keeping it simple is the
key.
8. Technical
Assistance is available: Personal
assistance from trained experts is
needed to help farmers explore problems and possible options they might
otherwise not be aware of. Access to advisors should be easy, assistance might
be provided one-on-one at the farm. Training of farmers should be available to
transfer the needed information from experts to the farmer.
9. The
Farm Plan Itself is Confidential
Information contained in written
farm plans must remain confidential farmers who fear neighbors or inspectors
looking over their plan are unlikely, to be honest towards the problems or to
be very ambitions in their commitment to future actions.
STEPS IN WHOLE FARM PLANNING AND
BUDGETING
A systematic procedure is generally
followed in making sound plans for the success of the farm business. To make
farm plan successful, the following steps should be adopted with relevant to a
given farm and its resources.
1. Statement of objectives
2. Diagnosis of existing organization
3. Assessment of resource endowment on the
farm
4. Identify enterprise to be included
5. Preparation of enterprise budget
6. Identification of risk
7. Preparation of plan
1. Statement
Objective: The objective of the farmer may be profit maximization or cost
minimization so in selecting enterprises and their combinations, the farmer
aims at maximization of profits. On the other hand, while choosing resources
and their combination he aims at cost minimization.
2. Diagnosis
of the Existing Organization: The planner has to examine the existing
organization of farm business carefully and identify the weakness or defects or
loopholes in the current plan.
3. Assessment
of resources endowment on the Farm:
(a) Land:
there is a need to spell out the land holding area ie wet or dry land, corps grown,
type of soils available, topography, textures, fertility status, drainage, soil
and water development, soil water conservation methods etc if the land is
sloppy conservation process is essential, also specify cost, if the soil is
having drainage problem measures taken by the farmer are indicated.
(b) labor:
the extent of family labor available
with the farmer’s. household laborers if any engaged by the farmer should be
indicated.
(c)
Capital:
working capital require for raising crops should be indicated, owned fund and
amount of borrowed fund interest paid etc should be clearly specified. Fixed
capital. Information on farm building farm equipment and farm machinery etc.
(d) organization: The farmer’s knowledge in
farming his expertise, his experience in farming and confidence in adapting new
potential technology should be assessed.
(e) Irrigation source: Availability of
difference sources of irrigation, period availability of irrigation, quality of
irrigation water available, crops demand for irrigation water, should also be
indicated.
4. Identification of Enterprise to be included
identify list of other Enterprise not grown by the farmer.
Information
on input and output prices should be collected so as to work out the cost and
returns.
5. Preparation of Farm Enterprise Budget-:
Estimate income, cost and profitability of each enterprise to be included in
the plan.
6. Identify Risk: We should list out all
type of risk- production risk, weather risk, technological risk, institutional
risk, marketing risk, etc faced by farmers, particularly the incident of pests,
rodents, and diseases. Floods havoc these should be kept in view in formulating
relevant alternative farm plans.
7. Preparation of Plan: identify the most
scarcest resources and selecting that enterprise which yields maximum returns
per unit of scarcest resource.
ESSENTIAL CONTENTS OF A WHOLE FARM PLAN
The topics listed below, either
alone or in combinations, are the minimum that should be considered for a whole
farm plan to serve its intended purpose;
1. Farm
family Goals
The farmer and the whole family
should develop their overall goals. Personal goals for business, lifestyle,
quality of life, and landscape beauty are all relevant.
2. Economic vailaiblity of the farm
The
plan should evaluate not just productivity per acre, but total profitability.
Input cost reduction and higher prices for farm products sold are just as
important to profit as the amount produced. Some farmers may want to include
factors beyond the bottom line, such as reducing dependence on government programs,
balance between livestock and grain production, total level of debt, stability
of income, and responsiveness to market changes. The plan should include
provisions for record keeping and making adjustments as needed.
3. Water quality
The plan should include how to protect all forms of
surface water and groundwater.
4. Soil conservation
The plan should aim for erosion control that achieves
tolerable rates of soil loss.
5. Nutrient Management
The plan must account for reducing pollution and
maximizing benefits of soil fertility. In addition to natural and “home grown”
nutrients (from previous crops), the plan should consider fertilizers, manure
management if applicable, and feedlot management if applicable.
6. Water
Management
The plans should consider water quantity issues
related to wetlands, drainage, flood plains, irrigation, and water
conservation.
7. Pest management
The
plan should evaluate how to minimize pest problems, including prevention of
pollution form pesticides.
8. Soil Quality
The
plan should consider building soil quality over the long run, including organic
matter and soil fertility.
9. Crop
rotations
The
plan should evaluate how to maximize benefits from rotating crops
10. Tillage
The
plan should consider tillage alternatives to improve soil conservation and
quality.
BUDGETING
The expression of farm plan in
monetary terms is called farm budgeting it is simple an attempt to quantify the
effect of proposed plan. Farm budgeting
are classified into:
Enterprise budget, Partial budget, and
Complete or Whole farm budget.
Farm
budget is a method of examining the profitability of alternative farm plans. In
budgeting process, we estimate costs, returns and net profit of a farmer or a
particular enterprise and hence it helps advance estimation of expenses and
income of a farm business. Budget are
usually prepared for a year, considering the revenue and expenditure. When
budgeting is done for a single enterprise or two it is known as partial
budgeting, if it is done for all the enterprises in terms of cost, revenues,
and net profit for the whole farm then it is termed as complete budgeting or
total budgeting or whole farm budgeting. But the best combination of
enterprises is judged based on the productivity of the resources and the
ability of farm operator to maximize the returns. Therefore whole budget is
overall impact of a proposed plan on the whole farm system.
Farm budgeting is very essential to
farmers in the essence that
* It
assist farmer in exercising economic control over his farm business.
* It helps
the lending institutions indecision like justifying the sanction of loan or
rejection of the same.
* Credit
needs of the farmer in different time periods of the year are vividly shown by
the budgets
* Budget
also helps infixing the repayment schedules and sanction of loans at
appropriate time.
* This
budgets form a basis to determine the quantum of credit to be given to a
particular farm.
These are
also advantage of budget
1. Estimation
of economic viability of agricultural development protects
2. Judges
the repayment capacity of the farmer
3. Preparation
of cash flow statements
4. Assessment
of credit requirements of the farmers in different seasons of a year
5. Maximization
of net returns from the farm as a whole.
Partial and completes budget distinctly
differ from each other in the following ways. In partial budgeting we try to
introduce minor changes like use of high yielding varied of seeds. Different
does of fertilizer use e.t.c their corresponding costs and returns in terms of
added costs and added returns and bring forth the impact of these minor changes
on returns of the enterprise. Only few alternatives in some part of the farm
are chosen with a good range of profit.
While complete budgeting we
contemplate complete transformation in enterprises bringing about desired
changes in method of production, techniques adopted.
By
doing so sometimes new potential enterprises are selected replacing the
traditional ones.
All
possible alternatives are tried in the entire farm and the best profitable
alternatives are chosen.
* Budgeting
involves three main steps
1. Preparing
a description and specification of the proposed plan, in terms of the area of
each crop and class of livestock and the methods of production.
2. Testing
the feasibility of the proposed plan in terms of the resource requirements
relative to what are available and to other institutional social and cultural
constrains.
3. Evaluation of the plan-: In budgeting,
specification of farm plans depends on the planner’s judgment although it must
be influenced by technical knowledge of what crop varieties, types livestock
and methods of production that are suited to the environment. Specification is
then designed to remove or overcome the constraints where promising new
technology is available.
The second stage involves estimation
of whether sufficient land is available to allow the planned crops to be
incorporated in a rotation which will maintain soil fertility. Animal or
machine power and cash constraints may also be considered the may be tested to determine whether
sufficient food will be produced to meet family needs.
The final evaluation involves
assessing cost and benefits to the farm family. These are usually estimated in
money terms which may place undue emphasis on financial profits.
Preparing
budget, estimates are needed of the resource input requirement, the yields,
cost and benefit of each enterprise included in the plan. These are then
compared with the resources base of the farm and used in evaluating the outcome.
Summary
1. Planning is an important activity in
managing a farming system. Although generally subjective and informal, Budget
are used to design future strategies, for budgetary control, for prescribing
and predicting the farmer’s decision-making.
2. Budgeting involves three main steps:
specifying a plan, testing its feasibility, in terms of resource requirements
and availability and evaluating the expected outcome.
3. The necessary input output data may be
obtained form farm survey or case-study records, for new-technologies form
experimental results or from published standards.
4. Whole farm plain is overall impact of a
proposed plan on the whole system partial plan affect only a particular
enterprise or sub-system.
5. It is essential that farmers must be
involved in learning about the problems of the farm in order to attend the
expected goal.
REFERENCES
Adegeye A.J. and Dittoh, J.S (1985) Essential of
Agricultural Economics Ibadan impact publisher Ltd.
Heady E.O and H. R Jensen (1964) farm Management
Economics pretentic-Hall of India, new Delhi
James C. Van Horne (1984) fundamentals of financial
Management
Loni Kemp, (July 1996) the Minnesota project
Raymond R. Beneke, John Wiley and sons (1966) managing
the farm Business.
Reddy Ram, Sastry Devi (2004) Agricultural Economics.
Subba Reddy, P. Raghu Ram (1996) agricultural finance
and management.
Upton martin (1996) The economics of tropical farming
system.
Uptom Martin(1972) Farm management in Africa. Oxford
ELBS.
Farm planning means assessing the implications of
allocating resources in a particular way before deciding whether to act.
Therefore it is the foundation of management.
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