Join our WhatsApp and Telegram channels for the latest Notes and Updates
Budgeting can be used to select the most profitable plan from among a number of alternatives and to test the profitability of any proposed change in plan. It involves testing a new plan before implementing it, to be sure that it will improve profit. Farm budgeting is a method of estimating expected income, expenses and profit for a farm business.
Farm budgeting means estimation of cost, returns and net profit of farm.
2) Define farm planning and enlist its steps and explain importance and characteristics of a good farm plan.
Farm Planning: It is a process to allocate scarce resources of the farm to organize the farms production in such way that to increase resources use efficiency and income of the farmer. Programme of total farm activity in advance flexible or adoptable to changing environmental condition.
Steps in farm planning
1) Preparation of farm map
2) Recording the History of Farm
3) Planning Bullock and Human labour requirement 4
) Planning the land use & soil conservation practices.
5) Planning livestock programme
6) Planning of marketing of produce.
Characteristics of good farm plan
1. It should for efficient use of farm resources
2. The crop plan should have balanced combination of enterprises
3. Avoid excessive risk
4. Provide flexibility
5. Utilize the farmer's knowledge, training and experience and consider farmer's like and dislike
6. Give considerations to efficient marketing facilities
7. Provide programme of obtaining, using and repaying the credit.
8. Provide for the use of up to date modern Agricultural methods and practices.
3) What are the seven types of costs? Explain the relationship between average and marginal cost curves
4) State the different types of farming and explain specialized farming with its advantages and disadvantages.
Type of farming refers to the combination of product that a farmer may choose to produce during a particular crop season or ever a long time as a regular practice. Also refers to methods of farming.
Types of farming
1. Specialized farming
2. Diversified farming
3. Mixed farming
4. Dry farming
5. Ranching
Specialized farming:
50% or more income derived from single product or source
Basically adopted where there are special market outlets and when economic agroclimatic conditions are uniform and dairy farming, poultry farming, vegetable farming near metropolitan cities.
Advantage:
1. Better to use of land
2. Better marketing
3.Better management
4.Efficiency of resource use increases
Disadvantages:
1. Greater risk
2. Resources are fully utilized
3. Fertility of land not maintained
4. By product cannot be used
5. Farm income is not distributed throughout year.
Diversified farming:
No single produce/ contribute more than 50% in farm income. Farmers are depending on more than one enterprise.
Advantage:
1. Better use of land
2. Better marketing
3. Better management of resources
4. Efficiency of resource use increased
Disadvantages:
1. Greater risk of crop failure or price risk
2. Resources are fully utilized
3. fertility of soil cannot be maintained
5) What is Farm Management? State its objectives and Explain different economic principles applied to farm management.
Principles of farm management
Farm management may be defined as the science that deals with the organization and operation of the farm in the context of efficiency and continuous profits.
1. Law of variable proportions or Law of diminishing returns: It solves the problems of how much to produce ? It guides in the determination of optimum input to use and optimum output to produce.. It explains the one of the basic production relationships viz., factor-product relationship
2. Cost Principle: It explains how losses can be minimized during the periods of price adversity.
3. Principle of factor substitution: It solves the problem of ‘how to produce?. It guides in the determination of least cost combinations of resources. It explains facot-factor relationship.
4. Principle of product substitution: It solves the problem of ‘what to produce?’. It guides in the determination of optimum combination of enterprises (products). It explains Product-product relationship.
5. Principle of equi-marginal returns: It guides in the allocation of resources under conditions of scarcity.
6. Time comparison principle: It guides in making investment decisions.
7. Principle of comparative advantage: It explains regional specialisation in the production of commodities.
6) State and explain law of decreasing returns with example. State the reasons for the operation of the law in agriculture.
7) Explain the importance of farm records and accounts in managing a farm. State advantages and difficulties in farm records and accounts keeping.
Importance of farm records and accounts
1. Farm records help a farmer to keep stock and manage each aspect of the farm properly.
2. They are important for planning and budgeting. They provides a farmer with enough information needed for proper planning and budgeting at every point in time.
3. They help farmers know the progress and contributions of each aspect of the farm to its overall success.
4. They are important for proper farm management.
5. They can be very helpful when a farmer needs to access financial aids from banks or other financial institutions.
8) Give the definition of agriculture production economics and explain its scope in brief.
9) Define risk and uncertainty and differentiate between risk and uncertainty.
Definition of risk and uncertainty
Risk: is a situation where all possible outcomes are known for a given management decision and the probability associated with each possible outcome is known. Risk and it refers to variability or outcomes which are measurable in an empirical or quantitative manner. Risk is insurable.
Uncertainty: exists when one or both of two situations exist for a management decision. Either all possible outcomes are unknown, the probability of the outcomes is unknown or neither the outcomes nor the probabilities are known. Uncertainty refers to future events where the parameters of probability distribution (mean yield or price, the variance, range or dispersion and the skew and kurtosis) cannot be determined empirically. Uncertainty is not insurable
10) What is linear programming? Give its components and assumption of linear programming.
What is linear programming? Enlist assumptions of linear programming problem.
Linear programming is the general technique of optimum allocation of scarce or limited resources such as labour, material, machine, capital, energy etc. into several competing activities such as products, services, jobs, new equipment, projects etc. on the basis of a given criterion of optimality.
Assumptions of L.P. problem
1. Linearity of objective function and resource constraints.
2. Proportionality of activities to resources.
3. Additivity of Resources and Activities
4. Divisibility (Continuity) of the activities as well as Resources
5. Finiteness or Activities and Resource Restrictions
6. Single Value Expectation
7. Non negativity of Decision variable
11) Give meaning of product relationship. Enlist different types of enterprise relationship and explain complementary Enterprise
Product-Product Relationship
Product-Product relationship deals with resource allocation among competing enterprises.
The goal of Product-Product relationship is profit maximization.
Under Product-Product relationship, inputs are kept constant while products (outputs) are varied.
This relationship guides the producer in deciding ‘What to produce’
This relationship is explained by the principle of product substitution and law of equi marginal returns.
This relationship is concerned with the determination of optimum combination of products (enterprises).
Types of Product-Product Relationships or Enterprise Relationship
1) Joint Products
2) Complementary enterprises
3) Supplementary enterprises
4) Competitive enterprises
5) Antagonistic products
Complementary enterprises: Complementarity between two enterprises exists when with a change in the level of production of one, the other also changes in the same direction. That is when increase in output of one product, with resources held constant, also results in an increase in the output of the other product. The two enterprises do not compete for resources but contribute to the mutual production by providing an element of production required by each other. The marginal rate of product substitution is positive ( > 0). Ex: Cereals and pulses, crops and livestock enterprises.
12) Write Short note on:
a) Classification of natural resources
Classification Natural resources Natural resources are often classified into renewable and non-renewable resources.
Renewable resources: Renewable resources are generally living resources (fish, coffee, and forests, for example), which can restock (renew).
Non- renewable natural resources: Non-living renewable natural resources include soil, as well as water, wind, tides and solar radiation, etc Resources can also be classified on the basis of their origin i.e. biotic and abiotic
Biotic resources: Biotic resources are derived from animals and plants (ie-the living world). Biotic is a living component of a community; for example organisms, such as plants and animals.
Abiotic resources: Abiotic resources are derived from the non-living world e.g. land, water, and air. Mineral and power resources are also abiotic resources some are derived from nature. In biology and ecology, abiotic components are non- living chemical and physical factors in the environment which affect ecosystems. Natural resources: Natural resources are also categorized based on the stage of development:
Potential Resources: Those are known to exist and may be used in the future. For example, petroleum may exist in many parts of India and Kuwait that have sedimentary rocks, but until the time it is actually drilled out and put into use, it remains a potential resource.
Actual resources: Those that have been surveyed, their quantity and quality determined, and are being used in present times. For example, petroleum and natural gas is actively being obtained from the Mumbai High Fields.
b) Types of production function
1. Continuous Production Function: This is obtained for those inputs which can be split up in to smaller units. All those inputs which are measurable give raise to continuous production function. Example: Fertilizers, Seeds, Plant protection chemicals, Manures, Feeds etc
2. Discontinuous or discrete Production Function: Such a function is obtained for resources or work units which are used or done in whole numbers. In other words, production function is discrete, where inputs cannot be broken in to smaller units. Alternately stated, discrete production is obtained for those inputs which are counted. Example: Ploughing, Weeding, Irrigation etc.,
3. Short Run Production Function (SRPF): Production Function in which some inputs or resources are fixed. Y=f(X1/X2, X2, ....................Xn)
4. Long Run Production Function (LRPF): Production function which permits variation in all factors of production. Y-f(X1, X2, X3, ...........Xn)
c) Types of farm budgeting
1. Enterprise budgeting
2. Partial budgeting
3. Whole farm budgeting.
d) Cooperative farming
Co-operative farming means a system under which all agricultural operations or part of them are carried on jointly by the farmers on a voluntary basis, each farmer retaining right in his own land. The farmer would pool their land, labour and capital. The land would be treated as one unit and cultivated jointly under the direction of an elected management. A part of a profit would be distributed in proportion to the land contributed by each farmer and the rest of the profit would be contributed in proportion to the wages earned by each farmer. If the farmers are not willing to have a full scale co-operative farming, they can secure some of the economics by joining a particular form of co-operative organization namely, co-operative purchasing, co- operative better farming, co-operative selling, etc. Cooperative societies are of four types
a. Co-operative Better farming: Ownership individual-operation individual, it promotes the interest of farmer through adoption of better farming practices. Purchase of seed, irrigation, marketing of produce Free to fallow any way of farming, except in respect of purpose for which he joins society.
b. Co-operative Joint farming Ownership individual operation collective, Land is pooled for joint cultivation, ownership of land is recognized by payment of dividend in proportion of value of his land. Members works on the land under the direction of a managing committee and each member receive wages for his daily work
c. Co-operative Tenant farming: Ownership collective operation individual, The land is held by society. Land in then divided into plots which are leased out for cultivation to individual member. The society arranges for agriculture requirements viz, credit, seeds etc. Each members pays rent for his plots and is at liberty to dispose off his produce is a manner as he likes
d. Co-operative Collective farming: Ownership collective- operation collective, the method of work is as similar to cooperative joint farming, but the share of individual member is not recognized. The profits are paid to members in proportion to the work and capital contributed by each member
e) Least cost combination
f) Natural Resource Economics
g) Causes of resource depletion
Resource depletion: Resource depletion is an economic term referring to the exhaustion of raw materials within a region. Resource depletion is most commonly used in reference to farming, fishing, mining, and fossil fuels.
Causes of resource depletion
1. Over-consumption/excessive or unnecessary use of resources,
2. Non-equitable distribution of resources,
3. Overpopulation
5. Technological and industrial development
4. Slash and burn agricultural practices
6. Erosion,
7. Irrigation,
8. Mining for oil and minerals,
9. Aquifer depletion
10. Forestry.
11. Pollution or contamination of resources
h) Farm Inventory / iso-quant
Q. Classify farming systems and explain the specialized farming system with its advantages and disadvantages.
Classification of Farming Systems
1. Specialized Farming
2. Diversified Farming
3. Mixed farming
4. Dry Farming
5. Ranching
1. Specialized Farming:
When a farm business unit derives more than 50 percent of the income from a single enterprise. Reasons for specialized farming are (1) assured income from the enterprise (2) its suitability to the area (3) its relative profitability.
Advantages
1. Better utilization of land- for most productive use alternative crops.
2. Better management- more attention on a particular enterprise reduces wastage of resources 3 Less requirement of equipment.
3. Income in skill of farmer-Farmer will concentrate on one enterprise.
4. Allows better marketing functions.
Disadvantages
1. Failure of crop-Risk is more.
2. Non utilization of productive resources- Farm resources are not fully utilized.
3. Affects of soil health- continuous raising of one crop or few crop- affects soil health
Q.) Define farm management, Enlist the principles of farm management and explain in short cost principle.
Farm management means decision making on use of scarce resources to obtain maximum profit and family satisfaction on a continuous basis from farm as a whole.
Principles used in farm management
1. Law of diminishing marginal returns (law of variable proportion)
2. Law of equi-marginal returns (Opportunity cost principle)
3. Law of substitution (least cost principle)
4. Principle of combining enterprises or products
5. Cost concepts and Principles
6. Law of comparative advantage
Seven Cost concept
1. Total cost
2. Fixed cost
3. Variable cost
4. Average total cost
5. Average fixed cost
6 Average variable cost
7. Marginal cost
Join our WhatsApp and Telegram channels for the latest Notes and Updates
