Farm Management – SS3 Horticulture and Crop Production Lesson Note (Second Term)

Farm management is the art of making decisions about how to use land, labour and money to run a farm at a profit.

• Planning: deciding what to do in the season and how to do it.
• Budgeting: working out expected income and expenses.
• Record keeping: writing down everything that happens on the farm.

Behavioural objectives

By the end of the lesson, students should be able to:

1. define farm management, farm planning and a budget;
2. give reasons why a farmer plans;
3. distinguish a short-term plan from a long-term plan;
4. distinguish a partial budget from a complete farm budget;
5. list the important farm records and state how they help a farmer;
6. identify common management mistakes.

What is farm management?

Farm management is the art of making decisions that turn farm work into a profitable business.

• The manager’s role: a farmer must think like a manager as well as work like a labourer.
• The “brain” of the farm: management tells the “hands” what to do. Poor planning means hard work for little gain.
• Daily decisions: what to plant, how many labourers to hire, and when to sell animals such as goats.

What resources does a farm manager control?

• Land: the soil and space on which crops and animals are kept.
• Labour: the people who do the work, family or hired.
• Capital: money, tools, machines, seeds, fertiliser and buildings.
• Management: the farmer’s skill in combining the other three to earn a profit.

What is farm planning?

Farm planning is a written statement showing how land, labour and money will be used to get the best result.

• Simple comparison: a plan is like the drawing for a house. Building without one leads to mistakes.

Why does a farmer plan?

• To avoid waste: a farmer does not buy 10 bags of fertiliser when only 5 are needed.
• To prepare for risks: if the rain does not fall in June, a good plan has a “Plan B”.
• To get loans: a bank will not lend money without a clear plan of what the farmer wants to do.

What are the steps in making a farm plan?

1. Set clear goals for the season.
2. List the land, labour and money available.
3. Choose the crops or animals to produce.
4. Decide the dates for each activity, such as land preparation, planting, weeding and harvesting.
5. Plan for risks such as drought, pests and price falls.
6. Review the plan at the end of the season and correct weak points.

What are the types of farm plan?

There are two types of farm plan: the short-term plan and the long-term plan.

• Short-term plan: decisions for one season, e.g. “I will plant cucumbers this month”.
• Long-term plan: big goals for the next 5 or 10 years, e.g. “I want to build a poultry house and a cold-room”.

What is farm budgeting?

A budget is a list of expected income (money coming in) and expected expenses (money going out).

• Timing: prepare the budget before farming starts, not after.
• Expected profit: total expected income minus total expected expenses.

What are the main items in a farm budget?

• Income: money from sale of crops, eggs, animals and other produce.
• Fixed costs: costs that do not change with output, such as land rent and the wear of machines.
• Variable costs: costs that change with output, such as seeds, fertiliser, fuel and casual wages.

What are the types of budget?

There are two types of farm budget: the partial budget and the complete farm budget.

• Partial budget: used for a small change, e.g. “Should I keep my old manual sprayer or buy a motorised one?”
• Complete farm budget: a plan for the whole farm for the entire year. It lists every kobo expected on seeds, fuel, wages and repairs.

What is the golden rule of budgeting?

The golden rule is conservative budgeting: expect costs to be a little higher and sales a little lower than you think.

• Costs: assume things may cost a little more.
• Sales: assume the harvest may sell for a little less.
• Benefit: this protects the farmer from surprises.

Why should a farmer keep records?

Farm records are documents that show everything that happens on the farm.

• Memory: what is not written down is soon forgotten.
• Profit or loss: without records, a farmer cannot know whether the farm is making a profit or a loss.

Which records does every farmer need?

• Farm inventory: a list of everything owned (tractors, hoes, bags of fertiliser, number of cows) and its present value.
• Production records: output such as crates of eggs laid today or tonnes of maize harvested.
• Financial records: every purchase and sale written down, with receipts kept in a file.
• Labour records: who worked on each day and how much each person was paid.

How do records help a farmer?

1. Tax and insurance: records are needed to pay the right tax or to claim insurance after a flood.
2. Spotting problems: if chickens eat more but lay fewer eggs, the birds may be sick or the feed may be bad.
3. Better planning: last year’s records show how much seed is needed this year.
4. Loans: records show a bank that the farm is run as a business.

What are the common management mistakes?

• Mixing personal and farm money: taking money from the “farm pocket” for clothes or school fees without writing it down makes a healthy farm look as if it is failing.
• Neglecting maintenance: without a plan for repairs, the tractor may break down in the middle of harvest.
• Avoiding technology: a notebook can get wet or lost, while a mobile record-keeping app with a backup is safer.
• Budgeting after farming starts: a late budget cannot guide spending.
• Keeping no records: the farmer cannot tell profit from loss.

Evaluation

1. Define farm management.
2. State three reasons why a farmer should plan.
3. Distinguish between a short-term plan and a long-term plan, giving one example of each.
4. What is the difference between a partial budget and a complete farm budget?
5. List four records a farmer should keep.

Assignment

Answer both parts: (a) Explain three ways in which farm records help a farmer. (b) Explain why mixing personal money with farm money is a management mistake.