Economics for Economy

𝗧𝗵𝗲 𝗰𝗼𝗻𝗰𝗲𝗽𝘁 𝗼𝗳 𝗮𝗻 "𝗮𝗯𝗻𝗼𝗿𝗺𝗮𝗹" 𝗱𝗲𝗺𝗮𝗻𝗱 𝗰𝘂𝗿𝘃𝗲

refers to a demand curve that doesn't follow the typical laws of demand. In economics, the law of demand states that, all else being equal, as the price of a good or service increases, the quantity demanded decreases, and as the price decreases, the quantity demanded increases.

This is represented by a downward-sloping demand curve.

An "abnormal" demand curve would indicate a situation where this typical relationship between price and quantity demanded doesn't hold. There are various reasons why you might observe an abnormal demand curve:

1. Veblen Goods: These are luxury goods for which the demand actually increases as the price goes up. This is often because the higher price is seen as a status symbol, and people desire these goods more when they are expensive.

2. Giffen Goods: These are inferior goods for which an increase in price leads to an increase in demand. This can occur when the income effect (resulting from the lower real income due to the price increase) outweighs the substitution effect (which would normally lead to decreased demand as consumers switch to cheaper alternatives).

3. Speculative Bubbles: In financial markets, you can have situations where the demand for a financial asset (like stocks or real estate) increases as the price rises due to speculative buying, creating a bubble. This doesn't follow the typical demand curve.

4. Network Effects: In technology markets, products or services that become more valuable as more people use them (e.g., social media platforms) may exhibit an abnormal demand curve. As more users join, the value to each user increases, potentially leading to increased demand even with rising prices.

5. Supply Constraints: In some cases, if a good becomes scarce due to supply constraints (e.g., limited availability of a collectible item), the demand can increase as the price rises.

These are just a few examples of situations where you might observe an abnormal demand curve. In each case, the typical relationship between price and quantity demanded is disrupted due to specific factors unique to that particular market or product.

𝗔𝗴𝗿𝗶𝗰𝘂𝗹𝘁𝘂𝗿𝗮𝗹 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰𝘀 is a field of applied economics that examines the economic factors and processes involved in food and fiber production. It considers how scarce resources are allocated, distributed, and used in agriculture, with the goal of optimizing production and distribution of agricultural products.

𝙎𝙤𝙢𝙚 𝙤𝙛 𝙩𝙝𝙚 𝙠𝙚𝙮 𝙖𝙧𝙚𝙖𝙨 𝙤𝙛 𝙨𝙩𝙪𝙙𝙮 𝙞𝙣 𝙖𝙜𝙧𝙞𝙘𝙪𝙡𝙩𝙪𝙧𝙖𝙡 𝙚𝙘𝙤𝙣𝙤𝙢𝙞𝙘𝙨:

* Farm management and production economics: this area focuses on decision-making at the farm level, including resource allocation, production planning, and marketing strategies.
* Rural finance and institutions: this area examines the financial institutions and services that serve rural communities, such as agricultural credit markets and land tenure systems.
* Agricultural marketing and prices: this area analyzes the marketing of agricultural products, including pricing strategies, market structures, and transportation costs.
* Agricultural policy and development: this area examines the role of government policies in agriculture, such as farm subsidies, trade policies, and food safety regulations.
* Food and nutrition economics: this area analyzes the demand for food, food security issues, and the economics of malnutrition.
* Environmental and natural resource economics: this area examines the relationship between agriculture and the environment, such as the impact of agricultural practices on water quality, soil erosion, and biodiversity.

𝗪𝗵𝗮𝘁 𝗜𝘀 𝗮𝗻 𝗜𝘀𝗼𝗾𝘂𝗮𝗻𝘁 𝗖𝘂𝗿𝘃𝗲?
An isoquant curve is a concave-shaped line on a graph, used in the study of microeconomics, that charts all the factors, or inputs, that produce a specified level of output. This graph is used as a metric for the influence that the inputs—most commonly, capital and labor—have on the obtainable level of output or production.
The isoquant curve assists companies and businesses in making adjustments to inputs to maximize production, and thus profits.
𝙐𝙣𝙙𝙚𝙧𝙨𝙩𝙖𝙣𝙙𝙞𝙣𝙜 𝙖𝙣 𝙄𝙨𝙤𝙦𝙪𝙖𝙣𝙩 𝘾𝙪𝙧𝙫𝙚
The term "isoquant," broken down in Latin, means “equal quantity,” with “iso” meaning equal and “quant” meaning quantity. Essentially, the curve represents a consistent amount of output. The isoquant is known, alternatively, as an equal product curve or a production indifference curve. It may also be called an iso-product curve.

an isoquant shows combinations of capital and labor, and the technological tradeoff between the two—how much capital would be required to replace a unit of labor at a certain production point to generate the same quaintly of output.

Labor is often placed along the X-axis of the isoquant graph, and capital along the Y-axis.

Based on the 𝘓𝘢𝘸 𝘰𝘧 𝘥𝘪𝘮𝘪𝘯𝘪𝘴𝘩𝘪𝘯𝘨 𝘳𝘦𝘵𝘶𝘳𝘯𝘴 the economic theory that predicts that after some optimal level of production capacity is reached, adding other factors will actually result in smaller increases in output—an isoquant curve usually has a concave shape. The exact slope of the isoquant curve on the graph shows the rate at which a given input, either labor or capital, can be substituted for the other while keeping the same output level.

Reference:

Grand Economic Society

𝐅𝐀𝐂𝐓𝐎𝐑𝐒 𝐎𝐅 𝐏𝐑𝐎𝐃𝐔𝐂𝐓𝐈𝐎𝐍

Factors of production refer to the goods and services needed for the production of other goods and services. For example, if a farmer wants to produce wheat, he needs land, labor, seeds, manure, etc. All these things are called factors of production. No production is possible without factors of production.
According to J. L. Hansen, "The factors of production are the resources required for production".
Thus, the factors of production are the resources used in the process of production. They are also referred to as raw materials or means of production. Traditionally they are classified as land, labor, capital, and organization (or enterprise).

𝐋𝐀𝐍𝐃
In ordinary language, the term ‘land’ refers to the surface of the earth. But in economics, land includes not only the surface of the earth but also all other free gifts of nature such as forests, minerals, water, etc.

Characteristics or Peculiarities of Land
1. Land is fixed in supply
2. Land is a free gift of nature
3. Land is permanent and indestructible
4. Land differs in terms of fertility and situation
5. Land has no geographical mobility
6. Land is a passive factor of production
7. Land is subject to diminishing returns

𝐋𝐀𝐁𝐎𝐑
In common language, labor refers to the services provided by physical or unskilled workers. But in economics, labor refers to any human effort - physical or mental. So, the services provided by doctors, engineers, lawyers, teachers, etc. all are included in the meaning of labor.

Characteristics of Labor
1. Labour cannot be separated from the laborer
2. Labour is perishable
3. Labour is an active factor of production
4. Labour is a mobile factor
5. A laborer sells his labor, not himself
6. Supply of labor is inelastic
7. Labour has weak bargaining power

𝐂𝐀𝐏𝐈𝐓𝐀𝐋

In a simple sense, all types of wealth are capital. But capital has a different meaning in economics. In economics, capital is defined as productive wealth.
According to Marshall, “capital consists of all those wealth other than free gifts of nature, which yield income”.

Characteristics of Capital
1. A man-made factor
2. A passive factor
3. A mobile factor
4. A temporary factor
5. Elastic supply
6. Capital depends upon technology

𝐄𝐍𝐓𝐑𝐄𝐏𝐑𝐄𝐍𝐄𝐔𝐑𝐒𝐇𝐈𝐏(organization)

The organization is the factor of production which controls other factors of production. The other factors of production are land, labor, and capital. An organization is a factor of production that controls and regulates business, makes decisions, and bears the risk of loss.

Features of Organization
1. Takes the initiative
2. Self-motivated
3. Decision-maker
4. Resource mobilizer
5. Risk bearer
6. Innovator

Reference:enotes world

𝗧𝗵𝗲 𝘁𝗵𝗿𝗲𝗲 𝘀𝘁𝗮𝗴𝗲𝘀 𝗼𝗳 𝗽𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝗼𝗻

These concepts come together to provide a large amount of information regarding the economics of production processes. Assume that producers are “rational,” which simply means that they desire to maximize profits associated with their production activity.

𝐒𝐭𝐚𝐠𝐞 𝐈 𝐨𝐟 𝐩𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧
is defined by a level of input use that is to the left of point A in Figure below, where APP = MPP. Stage I is an “irrational” stage of production, in the sense that the producer can become more efficient if he or she increases the quantity of input used.
The APP curve in Stage I shows this. The APP curve represents the average productivity of the production process. Since the average productivity is increasing, the producer could become more productive by increasing the level of input use. Therefore, the rational producer will never locate in Stage I, because productivity could increase by using more inputs.

𝐒𝐭𝐚𝐠𝐞 𝐈𝐈, the stage between Stage I and Stage III, is the “rational” stage of production since the producer is operating in the region of input use that is most productive. The exact point of input use that is “optimal,” or profit-maximizing, depends on the price of the input, or the cost of acquiring the productive resource.

𝐒𝐭𝐚𝐠𝐞 𝐈𝐈𝐈 is also an irrational stage of production.The third stage of production includes all input levels greater than the point at which MPP becomes negative. (point B in Figure below ).
In Stage III, the producer is using too much input, since total productivity diminishes with each additional unit of input use.

The total output would increase if the number of inputs was decreased. In other words, higher levels of productivity are possible at lower levels of input use (too many cooks in the kitchen lower the number of meals cooked).

𝐏𝐑𝐎𝐅𝐈𝐓 𝐌𝐀𝐗𝐈𝐌𝐈𝐙𝐀𝐓𝐈𝐎𝐍

Firms makes decisions to maximize profit (total revenue minus total cost).
• To calculate production costs, firms must know two things :
(1) the quantity and combination of inputs they need to produce their product and
(2) the cost of those inputs.

𝐂𝐎𝐒𝐓𝐒 𝐈𝐍 𝐓𝐇𝐄 𝐒𝐇𝐎𝐑𝐓 𝐑𝐔𝐍

𝙁𝙞𝙭𝙚𝙙 𝙘𝙤𝙨𝙩𝙨(FC): are costs that do not change with a firm’s output. In the short run, firms cannot avoid fixed costs or change them even if production is zero.

𝙑𝙖𝙧𝙞𝙖𝙗𝙡𝙚 𝙘𝙤𝙨𝙩𝙨 (VC) : are those costs that depend on the level of output chosen.
𝙏𝙤𝙩𝙖𝙡 𝙘𝙤𝙨𝙩𝙨 : equal Fixed cost plus variable cost
TC = FC + VC
𝘼𝙫𝙚𝙧𝙖𝙜𝙚 𝙛𝙞𝙭𝙚𝙙 𝙘𝙤𝙨𝙩 (AFC) is total fixed cost divided by the quantity of output. As output rises, average fixed cost declines steadily because the same total is being spread over a larger and larger quantity of output. This phenomenon is called spreading overhead.
• Numerous combinations of inputs can be used to produce a given level of output. The least-cost combinations are optimal.

𝙏𝙤𝙩𝙖𝙡 𝙫𝙖𝙧𝙞𝙖𝙗𝙡𝙚 𝙘𝙤𝙨𝙩 TVC) is the sum of all costs that vary with output in the short run.
TC = TFC + TVC
𝙈𝙖𝙧𝙜𝙞𝙣𝙖𝙡 𝙘𝙤𝙨𝙩(MC) is the increase in total cost that results from the production of one more unit of output. If a firm is producing 1,000 units, the additional cost of increasing output to 1,001 units is marginal cost. Marginal cost measures the cost of the additional inputs required to produce each successive unit of output. Because fixed costs do not change when output changes, marginal costs reflect only changes in variable costs.
• Marginal cost is also related to marginal productivity and input costs. Marginal cost (MC) is equal to input price divided by the marginal product of that input.
• In the short run, a firm is limited by a fixed factor of production or a fixed scale of a plant. As a firm increases output, it will eventually find itself trapped by that scale. Because of the fixed scale, marginal cost eventually rises with output.
• Marginal cost is the slope of the total variable cost curve. The total variable cost curve always has a positive slope because total variable costs always rise with output. However, increasing marginal cost means that total variable costs and therefore total costs ultimately rise at an increasing rate.
𝘼𝙫𝙚𝙧𝙖𝙜𝙚 𝙫𝙖𝙧𝙞𝙖𝙗𝙡𝙚 𝙘𝙤𝙨𝙩 (AVC) is equal to total variable cost divided by the quantity of output.
• When marginal cost is above average variable cost, average variable cost is increasing. When marginal cost is below average variable cost, average variable cost is declining. Marginal
cost intersects average variable cost at AVC’s minimum point.

𝘼𝙫𝙚𝙧𝙖𝙜𝙚 𝙩𝙤𝙩𝙖𝙡 𝙘𝙤𝙨𝙩 (ATC) is equal to total cost divided by the quantity of output. It is also equal to the sum of average fixed cost and average variable cost.
ATC = AFC + AVC
• When marginal cost is below average total cost, average total cost is declining toward marginal cost. When marginal cost is above average total cost, average total cost is increasing. Marginal cost intersects average total cost at ATC’s minimum point.

𝐎𝐔𝐓𝐏𝐔𝐓 𝐃𝐄𝐂𝐈𝐒𝐈𝐎𝐍𝐒:

𝐑𝐄𝐕𝐄𝐍𝐔𝐄𝐒, 𝐂𝐎𝐒𝐓𝐒, 𝐀𝐍𝐃 𝐏𝐑𝐎𝐅𝐈𝐓 𝐌𝐀𝐗𝐈𝐌𝐈𝐙𝐀𝐓𝐈𝐎𝐍

• A perfectly competitive firm faces a demand curve that is a horizontal line (in other words, perfectly elastic demand).
• 𝐓𝐨𝐭𝐚𝐥 𝐫𝐞𝐯𝐞𝐧𝐮𝐞 (TR) is simply price times the quantity of output that a firm decides to produce and sell. Marginal revenue(MR) is the additional revenue that a firm takes in when it
increases output by 1 unit.
• For a perfectly competitive firm, marginal revenue is equal to the current market price of its product.
• A profit-maximizing firm in a perfectly competitive industry will produce up to the point at which the price of its output is just equal to short-run marginal cost: P = MC.
The more general profit-maximizing formula is 𝐌𝐑 = 𝐌𝐂 where 𝐏 = 𝐌𝐑 in perfect competition). The marginal cost curve of a perfectly competitive firm is the firm’s short-run supply curve.

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𝐀𝐠𝐫𝐢𝐜𝐮𝐥𝐭𝐮𝐫𝐚𝐥 𝐅𝐢𝐧𝐚𝐧𝐜𝐞

-𝐌𝐢𝐜𝐫𝐨𝐟𝐢𝐧𝐚𝐧𝐜𝐞

Microfinance of the agricultural sector is the provision of financial services, such as loans, savings and insurance, to low- or middle-income farmers. This type of financing plays an important role in developing the agricultural sector and enhancing rural livelihoods. Low- and middle-income farmers face a number of challenges in accessing traditional financial services, such as banks. 𝘛𝘩𝘦𝘴𝘦 𝘤𝘩𝘢𝘭𝘭𝘦𝘯𝘨𝘦𝘴 𝘪𝘯𝘤𝘭𝘶𝘥𝘦:
a. Insufficient assets or liquidity to secure loans: Low- and middle-income farmers rely on their limited financial resources to finance their agricultural activities. They often do not have sufficient assets or liquidity to guarantee loans from traditional banks.
b. High cost of conventional loans: Conventional banks typically charge high interest rates on loans to low- or middle-income farmers. This makes it difficult for them to afford loans and make a profit from their agricultural activities.
c. Lack of financial services in rural areas: Traditional financial services are often not available in rural areas, where most low- or middle-income farmers live. Microfinance for the agricultural sector can help low- and middle-income farmers overcome these challenges.

Potential advantages of microfinance for the agricultural sector include:
a. Increase agricultural productivity: Microfinance for the agricultural sector can help farmers purchase agricultural inputs, such as fertilizers and pesticides, leading to increased agricultural productivity.
b.Improving rural livelihoods: Microfinance for the agricultural sector can help farmers increase their incomes and improve their livelihoods.
c Promoting economic development: Microfinance for the agricultural sector can help promote rural economic development by increasing agricultural productivity and improving rural livelihoods.

There are a number of players providing microfinance to the agricultural sector, including:
a.Formal financial institutions: such as banks and microfinance companies.
b.Informal financial institutions: such as loan and savings associations and savings and loans groups.
c. Non-governmental organizations: such as non-governmental organizations that focus on rural development.

Microfinance for the agricultural sector can be a powerful tool for developing the agricultural sector and enhancing rural livelihoods. However, it is important that these programs are designed in a way that meets the needs of low and middle-income farmers.

Printing more money doesn’t increase economic output, it only increases the amount of cash circulating in the economy. If more money is printed, consumers are able to demand more goods, but if firms have still the same amount of goods, they will respond by putting up prices. In a simplified model,printing money will just cause inflation.

Suppose an economy produces $10 million worth of goods; e.g. 1 million books at $10 each. At this time the money supply will be $10 million.If the government doubled the money supply, we would still have 1 million books, but people have more money. Demand for books would rise, and in response to higher demand, firms would push up prices.

The most likely scenario is that if the money supply were doubled, we would have 1 million books sold at $20. The economy is now worth $20 million rather than $10 million. But, the number of goods is exactly the same.

We can say that the increase in GDP is a money illusion.

True you have more money, but if everything is more expensive, you are not any better off.

In this simple model, printing more money has made goods more expensive, but hasn’t changed the number of goods.

Doubling the money supply, whilst output stays the same, leads to a doubling in price and inflation rate of 100%

of

1. :
Analyzed by comparing income and expenses, high net farm income is usually an important goal of farm manager, though not necessary the only one.

2. Size:
Not have adequate resource is often a cause of low profit .growing too rapidly or exceeding the size that operator can manage effectively can also reduce the profit.

3. :
Low profitability can also be traced to inefficient use of resources in one or more areas of business .Both economics and physical efficiency measures should be examined.

4. Analyses:
Concentrate on capital position of Business including liquidity and solvency ,and change in owners’ equity .

5. :
The efficiency and profitability of each individual enterprise should be analyzed ,low profit in some enterprise may offset high profit in others.

FARM MANAGEMENT

WHAT IS FARM PLANNING IN AGRICULTURE

is a decision making process in the farm business, which involves organization and management of limited resources to realize the specified goals continuously.

Farm planning involves selecting the most profitable course of action from among all possible alternatives.

of Farm Planning:

The ultimate objective of farm planning is :
1-The improvement in the standard of living of the farmer and immediate goal is to maximize the net incomes of the farmer through improved resource use planning. In short, the main objective is to maximize the annual net income sustained over a long period of time.
2-The farm planning helps the farmer in the following ways:
3-It helps him examine carefully his existing resource situation and past experiences as a basis for deciding which of the new alternative enterprises and methods fit his situation in the best way.
4-It helps him identify the various supply needs for the existing and improved
5-It helps him find out the credit needs, if any, of the new plans

6- It gives an idea of the expected income after repayment of loans, meeting out the expenditure on production, marketing, consumption,

A properly thought of a farm plan might provide cash incomes at points of time when they may be most needed at the farm

*A farm plan is a programme of total farm activities of a farmer drawn out in advance. An optimum farm plan will satisfy all the resource constraints at the farm level and yield the maximum profit.

of a Good Farm Plan

A good farm plan generally should have the following characteristics:

*An element of flexibility in a farm plan is essential to account for changes in the environment around the farm

*A farm plan should maximize the resource use efficiency at the farm

*It should provide for the attainment of the objectives of profit maximization through optimum resource use and balanced combination of farm

*Risk and uncertainty can be accounted for in a good farm

The plan helps in timely acquisition and repayment
Components of Farm Planning:

Any systematic farm planning necessarily has the following components:

1.Statement of the objective function: Many farmers aim at profit maximization. However, some farmers do not go all out to maximize their profits, but have objectives like cereal requirements for the family and fodder needs for the livestock.

Inventory of scarce resources and constrains

*Land: Location, topography, soil type, fertility, drainage, irrigation systems and so on affect enterprises in many ways and hence, it is useful to divide all the land on a farm into different enterprises.

*Labour: On subsistence farms, all labour is supplied by the farmer and his family. Thus, it is important to record the number of workers - male, female and children - and the type of manual work each is prepared is undertake. However, in commercial farms, hired labour constitutes a major component of costs and thereby inviting more attention in the planning

*Capital: Whether fixed, like buildings and machines, or circulating, like cash in hand or in the bank, capital acts as a very powerful

*Personal: Farmers’ past experience, attitude towards risks and uncertainties and personal likes and dislikes influence the choice of

*Institutional: Market often serves as a constraint for the production of vegetables, poultry, milk, etc. Even if the location of the farm is suitable for a particular crop (commodity), a contract may still have to be obtained. E.g. Sugarcane growing near the sugar mills.

*Rotations: Maximum permissible area under a particular crop in a given season or minimum area constraints imposed on the acre under some crops like legumes would serve in maintaining soil fertility and help controlling pest and

*Alternative Choices: Alternative choices in planning refer to the various enterprises, crops and livestock, which can be considered for attaining the stated objectives. There are alternate ways to use the scarce farm resources. There may be more than one ways to produce the same enterprise. A comprehensive list of different alternative enterprises can be prepared.

*Input Output Co-efficient: The requirements of each of the several scarce resources and the financial returns per unit of each enterprise or activity need to be considered here. The precision in planning depends more on accurate input-output data than on the technique of planning.


in

The various steps involved in planning are discussed below:

:
This includes the identification and definition of the problem, collection of information, identifying alternative solutions and analyzing each alternative. Planning is the basic management function as it means deciding on a course of action, procedure or policy. The control function is a source of new information, as the results of the initial plan become.

:
Once the planning process is completed, the best alternative must be selected and action should be taken to place the plan into operation. This requires the acquisition and organization of necessary land, labour, capital and other inputs. An important part of the implementation function is the financing of the necessary

:
This 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”. Price and other changes, which occur after the implementation of the plan, can cause the actual results to deviate from the expected. Control requires a system for making regular checks on the plan and monitoring progress and results as measured against the established goals. The dashed line in the chart represents the continuous flow of information from the control function back to planning, an important part of the total system. Without some feedback procedure, the information obtained by the control system is of no use in making corrections in the existing plan or improving future plans. This feedback sets up a continuous cycle of planning, implementation, monitoring and recording progress, followed by a reevaluation of the plan and the implementation procedures using the new information obtained through the control function.

FARM MANAGEMENT

WHAT IS FARM PLANNING IN AGRICULTURE

is a decision making process in the farm business, which involves organization and management of limited resources to realize the specified goals continuously.

Farm planning involves selecting the most profitable course of action from among all possible alternatives.

of Farm Planning:

The ultimate objective of farm planning is :
1-The improvement in the standard of living of the farmer and immediate goal is to maximize the net incomes of the farmer through improved resource use planning. In short, the main objective is to maximize the annual net income sustained over a long period of time.
2-The farm planning helps the farmer in the following ways:
3-It helps him examine carefully his existing resource situation and past experiences as a basis for deciding which of the new alternative enterprises and methods fit his situation in the best way.
4-It helps him identify the various supply needs for the existing and improved
5-It helps him find out the credit needs, if any, of the new plans

6- It gives an idea of the expected income after repayment of loans, meeting out the expenditure on production, marketing, consumption,

A properly thought of a farm plan might provide cash incomes at points of time when they may be most needed at the farm

*A farm plan is a programme of total farm activities of a farmer drawn out in advance. An optimum farm plan will satisfy all the resource constraints at the farm level and yield the maximum profit.

of a Good Farm Plan

A good farm plan generally should have the following characteristics:

*An element of flexibility in a farm plan is essential to account for changes in the environment around the farm

*A farm plan should maximize the resource use efficiency at the farm

*It should provide for the attainment of the objectives of profit maximization through optimum resource use and balanced combination of farm

*Risk and uncertainty can be accounted for in a good farm

The plan helps in timely acquisition and repayment
Components of Farm Planning:

Any systematic farm planning necessarily has the following components:

1.Statement of the objective function: Many farmers aim at profit maximization. However, some farmers do not go all out to maximize their profits, but have objectives like cereal requirements for the family and fodder needs for the livestock.

Inventory of scarce resources and constrains

*Land: Location, topography, soil type, fertility, drainage, irrigation systems and so on affect enterprises in many ways and hence, it is useful to divide all the land on a farm into different enterprises.

*Labour: On subsistence farms, all labour is supplied by the farmer and his family. Thus, it is important to record the number of workers - male, female and children - and the type of manual work each is prepared is undertake. However, in commercial farms, hired labour constitutes a major component of costs and thereby inviting more attention in the planning

*Capital: Whether fixed, like buildings and machines, or circulating, like cash in hand or in the bank, capital acts as a very powerful

*Personal: Farmers’ past experience, attitude towards risks and uncertainties and personal likes and dislikes influence the choice of

*Institutional: Market often serves as a constraint for the production of vegetables, poultry, milk, etc. Even if the location of the farm is suitable for a particular crop (commodity), a contract may still have to be obtained. E.g. Sugarcane growing near the sugar mills.

*Rotations: Maximum permissible area under a particular crop in a given season or minimum area constraints imposed on the acre under some crops like legumes would serve in maintaining soil fertility and help controlling pest and

*Alternative Choices: Alternative choices in planning refer to the various enterprises, crops and livestock, which can be considered for attaining the stated objectives. There are alternate ways to use the scarce farm resources. There may be more than one ways to produce the same enterprise. A comprehensive list of different alternative enterprises can be prepared.

*Input Output Co-efficient: The requirements of each of the several scarce resources and the financial returns per unit of each enterprise or activity need to be considered here. The precision in planning depends more on accurate input-output data than on the technique of planning.


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The various steps involved in planning are discussed below:

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This includes the identification and definition of the problem, collection of information, identifying alternative solutions and analyzing each alternative. Planning is the basic management function as it means deciding on a course of action, procedure or policy. The control function is a source of new information, as the results of the initial plan become.

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Once the planning process is completed, the best alternative must be selected and action should be taken to place the plan into operation. This requires the acquisition and organization of necessary land, labour, capital and other inputs. An important part of the implementation function is the financing of the necessary

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This 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”. Price and other changes, which occur after the implementation of the plan, can cause the actual results to deviate from the expected. Control requires a system for making regular checks on the plan and monitoring progress and results as measured against the established goals. The dashed line in the chart represents the continuous flow of information from the control function back to planning, an important part of the total system. Without some feedback procedure, the information obtained by the control system is of no use in making corrections in the existing plan or improving future plans. This feedback sets up a continuous cycle of planning, implementation, monitoring and recording progress, followed by a reevaluation of the plan and the implementation procedures using the new information obtained through the control function.

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