In order to appreciate the principles of farm management, it is important to first of all

understand what a farm is and then the concept of management.

Basically, a farm is an .economic unit (firm) where inputs are transformed into outputs
through an interaction between natural and man-made factors. A combination of inputs
also called productive resources or factors of production are usually employed in
various proportions using the managerial acumen of the operator of the business who
may be called a manager. That is the dynamics of the farm as an economic unit.

The process of organizing and coordinating personnel, materials and processes in an

organization towards the achievement of the organization goals is termed management.
The subject branches into various fields application according to organizational
peculiarities. One of such areas of application of the concept of management is in the
operation of farm business.
What is Farm Management
There are different definitions of farm management. However it is pertinent to note that
Farm management is mainly concerned with the decisions which affect the objective
function of the farm business. A cardinal objective function of farm management is that
of profit maximization especially in the case of commercial farms.
If the farmer wants to run his farm as an economic entity, his aim should be to produce
output which the total value exceeds the total value of input used. This results in profit
for the farm. On the other hand, there will be . loss if the total value of the inputs is
higher than the total value of the output.
The total value of the output in financial terms is called Gross Revenue (Total
Revenue) while the total value of all inputs utilized is called the total cost of production.
Farm management can be thought of as being a decision making process, it is a
continual process because of the continual changes taking place in the economy, and in
an individual agri-business. The decisions are concerned with allocating the limited
resources of land, labour and capital among alternative and usually, competing uses.
This allocation process forces the farm manager to identify goals and objectives to
guide and direct decision making in the farm.
Here we shall adopt the definition, that: Farm management is a decision-making
process in which the available but limited production resources are allocated to selected
production alternatives, so as to operate the farm business in such a way as to attain
some set objectives.
Importance
of
Farm
Management
It is important to appreciate the fact that modern business management principles can
assist the farmer or farm manager, no matter how small his farm may be and however
meager his capital. This is because of the two major tasks facing todays farm
managers,
which
are:
(a) How best to incorporate new technologies into the farming enterprises; and
(b) How to be sufficiently flexible, mentally and financially, to adjust
the management of resources to meet changing costs and prices

and varying climatic conditions.

If proper management principles and techniques are applied by farmers it helps them to
meet these and other challenges with some good level of success.
There are real advantages in utilizing ideas of farm management along with new
technical advances and capital. All things being equal, there are always wide
differences in net farm incomes per hectare between those farms where modern
management ideas are utilized and those where they are not. Some dramatic
improvements have been made on farms, which have engaged management specialists
to assist in their technical and economic planning. Most farmers who have used
management advice have recorded increase in profit, relative to farmers who have not
done so. When the reason for the poor financial performance of a farm is analyzed, it is
frequently found that: activities (e.g. crops and animal productions) are not being carried
out in the best way; different activities are not well coordinated and; wrong activities are
being conducted. A farm manager can indicate to a farmer the cost, in terms of loss or
unrealized income of the present way of organizing and managing his farm.
This will frequently stimulate the farmer to take a keener interest in the technical
aspects of how he carries out his farming activities, it may also arouse his interest in
new activities, which can increase his net income.
Problems of Farm Management
The definition of farm management suggests that management is a problemsolving and decision making activity. Many farm management problems fall into one
or more of three categories, each of which can be put into the form of a question as
follows:
(i) How Much To Produce
Production is determined primarily by the number and levels of inputs used. A manager
is faced with various problems such as how much fertilizer and irrigation water to use,
seed application rates, feeding levels, labour and machinery use, and determination of
rates and levels for other inputs. The input levels selected will determine the level of
production and profit.

(ii) How to Produce: Many agricultural products can be produced in a number of ways.
Beef can be produced with a high-grain ration or a high-roughage ration. Crops can be
produced with large machinery and little labour or smaller machinery and more labour. A
manager must select the appropriate combination of
inputs, which will minimize the cost of producing a give quantity of some commodity.
(iii) What to Produce; The problem involves selecting th combination of crops and
livestock to be produced. Should tl~ agri-business produce only crops, only livestock or
son-combination? Which crop or crop rotation? Which livestock? Themanagement
selects from among the many alternative combinations, which will maximize profit, or
best meet some other goals.
Every production decision with which a farm manager is confronted relates to one or
combinations of these three questions or problem types. However one may also
consider a forth question of when to produce. This is relevant question because
production and marketing of agricultural output has very much to do with time periods,
which inform certain management decisions.
Essentially ail these are also general economic problems which have three
characteristics viz:
Goals or objectives to be attained.
A limited amount of resources to use in reaching these goals and Objectives.
A number of alternative ways to use the limited resources in attaining the goals and
objectives.

Planing is very important in any business; failure to plan is planning to fail. Planning
involves asking questions like what to do, when and how to do it in order to achieve the
desired goals?
Benefit of good Planning:
1.
It saves time.
2.
It saves energy.
3.
It saves cost.
4.
It allows for proper management.
5.
It allows for proper use of resources.
Factors to consider during Planning:
Individual aim or goal: Every farmer has own goal. Goals may be different from
individual to individual. The goal for establishing pig farm could be for money making,
humanitarian purpose, hobby, family consumption or for research purpose. The aim of

setting up the farm must be clearly spelt out this aim will affect mode of operation and
scale of production.
Available Resources: Consideration should be given to the available capital land and
human resources.
Location: Where to locate the pig farm in another important factor to take into
consideration. In order to avoid conflict, pig farm should not be cited where there are
lots of moslems. Busy environment should also be avoided.
Market: Pig farm should be cited where there is market potential for the products. the
Farm should not be cited where there is taboo against the eating of pork. A lot of profit
would be made if the farm is cited where is high demand of pork etc. Survey of potential
buyers of the product should also be carried out when planning for pig business.
Scale of Production: The scale of production could be either small, medium or large.
the scale of production depends on availability of resources, interest and goal of the
farmer. It is advisable to start on small-scale before going into large-scale production
in establishing pig farm or all other Agriculture farm animal product. The reason why I
said so is because starting on small-scale will reduce risk and all the technical knowhow would have been know.
Construction: Farmer should consider the type of material to be use for the housing
construction. Note that there are space sizes required for the pigs which I will be saying
later. Adulterated or sub-standard material should be avoided.
Professionals: Intending pig farmer should seek professionals advice like us in the
business. He should seek advice to get good foundation stock, management practice,
the profitability and marking of the product.
Environmental Factor: Environmental factors such as relative humidity, temperature,
sun-shine, etc. affect pigs. Also noisy area should be avoided when citing a pig farm.
Wages and Salary: How much to pay the employees should also be put into
consideration and appropriate of schedule of work should be drawn for staff(s).
Source of water: Pig farm should be cited where there is good source of water supply.
System Of Production in Pig Farming
There are three (3) system of pig production depending on the interest of the farmer,
available resources and land .
The 3 Method are:
1.
Extensive system
2.
Semi-Intensive system
3.
Intensive system
Extensive System: It is otherwise called free range system. where by Pigs move from
one place to another scavenging for food by them self. They roam around the house
and the surroundings. Local breeds are commonly reared in this system.
Advantage:

It is less expensive because little amount of money is spent feeding and housing
them.

Little or no money is spent on their medication.

Disadvantages:

Poor record keeping.

The pig found in this type of system are prone to diseases.
They are also prone to predators.
The system predisposes to conflict among members of the people living around
the area or community.

The pigs are always dirty.

It constitutes nuisance to the environment.

The pigs can be easily stolen.

Intensive System:
In this type of system, the pigs are confined; feed and shelter is provided for the pigs
also.
Advantages:

It allows for large-scale production.

Disease management is simple.

Performance of pigs can be easily monitored.

It allows for good record keeping.

Pigs are well protected against predators.

Mortality rate is low.

Small space is required compared to extensive system.

The droppings can be well managed to reduce environmental pollution.

Disadvantages:
It is capital intensive, (that is very expensive to start up) especially at the initial stage.
Semi-Intensive System:
It is mid-way between intensive and extensive system of pig production. It is good for
small-scale production because less capital is required compared to the intensive
system of production. Shelters are provided for the animals and they can confined in a
place. Agricultural wastes, house-hold wastes, kitchen wastes or forages are also
given to the pigs at less once or twice daily.
Housing:
There are different ways of constructing pig houses, depending on the stages of
production of pig, the available resources, the preference of the farmer and location.
Factors To Be Cosidered When Designing House For Pig.
Flooring: The house must be properly floored. Cemment and sand must be properly
mixed as recommended by civil engineer or experienced professional in the
construction industry. If the house is not well concreted pig can dig the floor and do
damage to the floor. Experienced bricklayer must be used for the flooring. The floor
should be freely drained.
Walls and Partitions: wall ans pertitions must be strong. The height should be around
1.5 metre from the ground level to prevent pig from jumping the well.

Roofs: The roof shouldbe water tight and must have good insulation. Aluminium roofing
sheet should be avoided because of the heat conduction. Asbestors roofing sheet is
more better and preferable. there should be open space of about 2 metres between the
wall and the roof for proper ventilation.
Doors: The doors should be built of strong iron of about 1.5 metre hight.
Types of Piggry Housing
1.
Farrowing House
2.
Breeding house
3.
Grower/fatteners house

Setting of Business Objectives in Agriculture is very important.

The first move of the farm manager is to establish the goals and objectives of the
business. Whoever owns the business sets the goals and objectives. If it is a business
that is jointly owned, the owners set the goals and objectives.
Without goals there is no way to measure the results of management decisions or make
proper decisions. Goals provide the guidelines for decision-making.
The major objective of the farm is profit maximization and others may be attaining a
particular output level or business size, reserving some time for leisure activities,
business growth, business survival, and maintaining a stable income over time.
Each of the above goals may be of primary importance to some individuals, depending
upon the time and circumstances. The objective may be in line with the social norms of
a place e.g. a Moslem cannot produce pigs. The objective may be for satisfaction or for
social security.
Some farmers who have risk aversion tendencies fear innovation e.g. introduction of
new crops. This is in most cases the problem of the small-scale farmer who is afraid of
the risk of starvation. He always takes to those
crops that yield best under the worst conditions while the commerce farmers take to the
crops that give the highest yield under the best condition.
The decision maker must also consider the short and long run before stating his
objectives. Therefore most people do not always make their objective those of profit
maximization rather try at satisfying profit.
The Decision Making Process

Decision-making selects one or more alternatives that will maximize the objective. A
manager is judged by his/her ability to take better decision: There are systematic steps
in taking decisions, which can be formalized into a logical and orderly series of steps.
The important steps in the decision-making process are:
1.
2.
3.
4.
5.
6.
(i)

Identification and definition of problem.

Collection of relevant data arid information.
Identification and analysis of alternative solutions.
Making the decision i.e. selecting the best, alternative.
Implementing the decision.
Observing the results and bearing responsibility for the outcome.
Identifying and Defining the Problem

This may essentially entail deciding how much to produce, how to produce,what to
produce and when to produce. These are basic problems faced by all managers.
Problems also result from identifying something that is not as it should be. Good
problem definition will minimize the time required to complete the steps of the decision
making process.
(2) Collecting Relevant Data and Information
Once the problem has been identified and property defined, the next step is to gather
data, information and facts and to make observations, which pertain to the specific
problem. Data as distinct from information could be defined as an unorganized
collection of facts and numbers which has not been subjected to analysis. To be useful,
these data need to be organized, sorted, and analyzed and some calculations made
using appropriate analytical tools. Information can be thought of as the final product
obtained. We can also use cash flow budget, partial budget, investment appraisal and
other methods as our tools. The relevant figures are estimates of what will happen in
future.
(3)

Identifying and Analyzing Alternative Solutions

Once relevant information is available, the manager can begin listing alternatives, which
can be potential solutions to the problem. Each

alternative should be analyzed in a logical and organized manner to ensure accuracy

and to prevent some things being overlooked. The qualitative effects of each likely
solution e.g. political decisions should also be evaluated.

(4) Making the Decision

Choosing the best alternative solution to the problem is not always an easy task nor is
the best solution always obvious. Some times the best alternative solution may be to do
nothing or to go back to redefine the problem and go through the decision making steps
again. After deciding the best solution, it is also, important to consider the most
important constraint to the solution. Often the one showing the greatest increase in
expected profit would normally be selected.
(5) Implementing the Decision
Selecting the best alternative will not give the desired result unless the decision is
correctly and promptly implemented. Doing nothing may be a correct decision but not
until the manager has done enough analysis of the problem. As a manager, any
decision taken has to be communicated to the subordinates. He also has to take control
action. Apart from communicating the decision, other functions that have to be carried
out here include organizing, coordinating, directing and supervising.
(6) Observing and Bearing Responsibilities:
Responsibility for the outcome of a decision rests with the decision maker. A reluctance
to bear responsibility may explain why some individuals find it so difficult to make
decisions. However, since it is difficult for managers to avoid decision-making, it follows
that they must bear responsibility, it goes along with the job of management. Careful
observations and analysis will result in additional information, allow corrections to be
made, and improve future decisions. Managers should always try to learn from their
past mistakes. Two important aspects of this control stage are monitoring and
evaluation.
Classification of Decisions
The decisions made by farm managers
organizational or operational decisions.
1.

can

be

classified

as

either

Organizational Decisions: These are decisions that are most likely to be taken by
a management board or group of people involved in the running of a farm firm. The
decisions do not come frequently, involve high cost and are long-term decisions.
Example of such decision is the decision on the type of tractor to buy.
2.
Operational Decisions:
These
are
made
more
frequently
than
organizational decisions and relates to many details necessary to implement the
farm business plan. They may be made on a daily, weekly, or monthly basis and are
repeated more often than organizational decisions. The-follow the routine and

cycles of agricultural production. Examples are selecting fertilizer and seeding rate
for the given year, making changes i livestock ration, marketing decision and daily
work schedules. There are also a number of characteristics by which a decision can
b-described and classified, which include:
(a) Importance
(b) Frequency
(c) Imminence
(d) Revocability
(e) Number of Available Alternatives

(a) Importance: Some management decisions may be more important the others.
Importance can be measured in several ways but the most cornmon would be in terms
of the amount of money involved in implementing the decision or the size of the
potential gain or loss. Decisions involving Ian amounts of money are less frequently
made e.g. purchasing of addition land, establishing an irrigation system etc while those
that are taken frequently are less important e.g. buying foods for the livestock.
(b) Frequency: Some decisions may be taken only once in lifetime, such as decision to
choose farming as an occupation. Other decisions must be made at least daily, such as
livestock feeding times, milking times, and the amount of feed to be fed each day. Such
frequently made decisions could be based on some rule of thumb or other
predetermined method,
(c) Imminence; A manager is often faced with making decisions before a certain
deadline or very quickly to avoid a potential loss e.g. When to plant crops and treatment
of livestock diseases are all imminent decisions that requires urgent attention otherwise
the manager pays dearly for it. Other decisions may have no deadline, and there may
be little or no penalty for delaying the decision until more information is obtained and
more time spent analyzing the alternatives.
(d) Revocability: Some decisions can be easily reversed or changed if observation
indicates that the first decision was not correct- An example would be a livestock feed
ration, which could be changed rather quickly and easily as long as the change is not so
abrupt so as to upset the livestock. Some other decisions may not be reversible or can
be changed only at a very high cost e.g. decision to construct a new building,
decision to kill the sick chickens when they could be cured; buying the wrong breed of
animals. Though some can be reversed but it is always at a high cost.
(e) Number of Alternatives: Some decisions have only two possible alternatives.
They are of the yes or no and buy or do not buy type. The manager usually finds these
decisions easier and less time consuming than others with large number of alternative
solutions.

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Management Functions Basically, the management functions include planning,
implementation and control. These are usually considered to be the three primary
functions of management.
(a) Planning
Planning function contains a number of steps including the identification and definition
of the problem, acquiring the initial information an; identifying alternative solutions. It is
developing the alternative ways <r doing things e.g. If we select a goal of rice
production, we have to think c~ sources of capital, sources and type of seeds, method
of production method of processing, storage and distribution.
Planning is a continual process as new problems and opportunities arise and as new
information becomes available from outside or within the system The programs in
planning have to be dove-trailed i.e. synchronized.
(b) Implementation
Once the planning process is completed, the best alternative must be selected and
action taken to place the plan into operation. Implementation may not occur quickly and
can require the organizing, coordinating directing, and supervising of the necessary
personnel, land, labour and capital over a period of time.
(c) Control
The control function provides for observing the results of the implemented plan to see if
the specified goals and objectives are being met. Many things can cause a plan to go
off its track. Errors are common among decision makers. No matter how good the plan
is, there must be some error. Control means, knowing where you are, where you are
going, when you should be there, where you are now, and changing direction if you are
off course or moving faster or slower. For example, if you target to get 2 tons per ha,
but after planting there is only 50% germination, you have to replant so as to get your
target of 2 tons. This is taking effective control measure at the right time and a good
control measure involves knowing what to do. The more complex the farm is, the harder
it is to take control. It is not possible to control every segment of a business. We have to
control the key areas that contribute to the day-to-day running of the business.

Effective control entails:

(i) An accurate record-keeping system and the ability to use it.

(ii) Key areas are to be defined when the plan is being made.
(iii) Performance standards should be kept for the key areas,
(iv) Execute the plan and measure the result.
(v) Compare the results with present standards
(vi) Take corrective actions
Effective control tools include:
(a) Budgets
(b) Progress charts
(c) Personnel records
(d) Quarterly reports
(e) Financial records
(f) Persona! observations.
(g) Production records
Methods used in control include:
(1) Control by exception
(2) Control by sampling
Control by Exception: Here the staff only report exceptional cases or eve that are
significant e.g. Reporting two chicks that die in every 100 chicks.
Control by Sampling: This control technique involves doing on-the-spot checks i.e.
subjecting the suspected area of low performance to on-the-spot observation.