FACTORS OF PRODUCTION
IN FARM MANAGEMENT
Farm management focuses on the business
aspects of running a farm.
The farmer makes decisions and choices to
organize and operate a farm.
Decisions and choices are necessary to
improve the farm production and profit.
Types of farm manager :
individual farmer on a family-operated farm
farm manager for a large-scale commercial
farm / a co-operative
The farmer organizes the factors of production
on his / her farm.
The farmer uses 3 things to produce goods.
the place where the farmer performs all
Labour is used for producing economic goods.
workers their skills and judgement
The amount of material resources and
money used for producing goods.
Capital on a farm includes:
tools and machinery
money to finance necessary
work / for investment
a landowner a tenant a farm manager
The entrepreneur (the farmer) organizes
the factors of production
(land, labour and capital)
to produce and sell goods.
3 factors of production (things)
land labour capital
1 factor of production (man)
Land Capital Labour
The total number of hectares on the farm is used
to describe farm size.
Capital replaces labour when large sophisticated
machines do the work of several men using
Production is organised to meet quantity, quality
and timing requirements.
A farm manager (1)
plans farming operations on the farm land
organizes the work of :
maintaining buildings capital
A farm manager (2)
hires and supervises workers labour
Workers (employees) perform the daily production
manual work : workers, seasonal workers
non-farming occupations : farm machinery operators /
bookkeepers / agricultural experts
A farm manager (3)
the farm’s relation of debts to assets
the resources of the farm
plans the use of the farm resources
monitors the outcome
A farm manager (4)
keeps records for management and tax
purpose in a business plan.
A business plan is a written document.
It is an organized collection of :
annual goal statements
marketing / production / financial plans.
A farm manager (5)
faces the following risks:
the influence of natural environment on agricultural
weather (drought, storms, too much rainfall)
diseases and pests
the fluctuation of agricultural market