ABE 137

Engineering Management

Module 1-B: FARM MANAGEMENT

Management – the process of optimizing human, material and financial contributions for the
achievement of organizational goals.
- The art of getting things done through other people. Managers achieve their goals by
arranging for others to perform whatever tasks may be necessary-not by performing the
tasks themselves.
- Management is defined as the process of setting and achieving goals through the
execution of the management functions that utilize human, financial, and material
resources.
- Process of planning, organizing, leading and controlling the efforts of organizational
members and the use of all available organizational resources in order to achieve the
stated organizational goals.
- Practice of consciously and continually shaping organizations.
- The effective and efficient use of scarce resources to achieve organizational goals.

Managers – people who are responsible for helping the organizational goal.

Characteristics of a Manager:
1. Assumes Responsibility
A manager is in charge of specific tasks and must see to it that they are done
successfully. The manager is usually evaluated on how well he/she arranged for these
tasks to be accomplished.
2. Must balance competing goals.
Each manager must strike a balance between goals and needs.
3. Conceptual Thinker
Every manager must be an analytical thinker; that is he/she must be able to think a
specific, concrete problem through and come up with a feasible solution for it.
4. Works with and through people (associates, supervisor and peers).
The manager works with anyone at any level in the organization who can help him/her
achieve unit or organizational goals.
5. Mediator
Disputes within a unit or organization can affect morale and productivity and may even
cause some competent employees to leave the organization. Settling disputes require
skill and tact, and a manager who is careless in handling such a problem may find that
he or she has only made it worse.
6. Politician
A manager, like a politician must use the arts of persuasion and compromise in order to
promote organizational goals.
7. Diplomat
The manager is the representative of his/her work unit at organizational meetings and
dealing with clients, customers, contractors, government officials and personnel of other
organizations.
8. Makes difficult decisions.
No organization runs smoothly all the time. Managers are the people who are expected
to come up with solutions to difficult problems and to follow through on their decision
even when doing so, may be unpopular with some persons.

Managerial Roles:
Liaison – interpersonal role; act as go-between.
Monitor – informational role; check what is going on outside the relationship.
Negotiator – decisional role; discussing and debating on certain issues

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FARM MANAGEMENT

- Study of the ways and means of organizing land, labor, and capital and the application
of technical knowledge and skill in order that the farm may be made to yield the
maximum net returns.
- It refers to the utilization of sound business principles and technical knowledge in the
planning and organization of a farm and the application of skill in its operation for the
purpose of attaining the largest continuous profit of the farmer as an individual.
- It is the art of applying business and scientific principles to the organization and
management of farm business enterprise for the purpose of securing the greatest
continuous profit.

Functions of Farm Management:

1. Management of Labor
Selecting methods and practices and training labor to be used in performing various
operations.
2. Making more or less short time minor adjustments in the proportion of the factors of
production and other parts of the farming program
This function refers to the making of adjustments from day to day or from week to
week-adjustments, which should not be postponed or adjustments of relatively minor
importance. Weather conditions and unexpected price or cost changes are the causes
that commonly give rise to such problems.
3. Controlling and directing the various resources
This could be related to #2, the problem of controlling and directing will be less
complicated. This is also related to solution of methods and practices, the problem of
how operations are to be performed.
4. Management of Capital and Management of Land (e.g. Buying and Selling)
5. Keeping records and accounts (e.g. Farm records and farm accounts)
6. Smooth operations
Seeing that the entire productive process proceeds smoothly from day to day throughout
the year.
Example: Use of implements, machinery, and labor must be planned so that each
operation maybe performed at the proper time and without unnecessary delays.
7. Noting tentative adjustments in the factors of production which seem desirable because
of price or market changes, savings of materials, utilization of waste or by-products, or
introduction of new methods and practices.

Management of Labor

Sources of Labor:
1. Family Labor – farm labor mainly supplied by the family circle.
2. Hired Labor – farm labor supplied from outside of the family.

Rules for Labor Management:

1. Plan a labor calendar, which will keep down the peak labor requirements
-an hour’s labor is worth much more in the rush seasons during harvest time, than of
other times of the year. “pakyawan”
2. Don’t do slack-season work during rush seasons
- put off manure hauling, fencing, cutting weeds in fence rows, etc. until times when
there is less to do.
3. Plan rainy-day work in advance
4. Exchange labor with neighbors
5. Cut chore labor to a minimum
6. Simplify and combine jobs whenever you can

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 7. To save labor on livestock, self-feed everything that you can
8. Use extra care in directing inexperienced labor
9. Select laborers carefully. Choosing the right people to the right job/work.
10. Clearly assign tasks, train and supervise labor with job analysis.
11. Develop initiative, good-will, cooperation and respect.
12. Plan day to day utilization of labor, make day to day adjustments.
13. Provide social life.
14. Keeping a high grade labor on the farm such as giving out bonuses and profit sharing.

Classification of Farm Jobs:

1. Fieldwork: Fieldwork on crops should come first and must be done in clear weather
with moderately dry soil. Plowing, preparing the seedbed and planting crops must be
done at just the right time to be most effective.
2. Outside work that can be delayed: These includes tasks as hauling manure, building
fences, plowing, husking corn, outside repairs to buildings, equipment etc.
3. Work for rainy days: In order that no time will be wasted by downpour, indoor work
such as repairing machinery, sharpening mower sickles, and oiling machinery and
harness should be kept in mind.

Fundamental Factors Responsible for Farmers’ Success:

1. Selection of the right farm for the type and system of farming to fit the farm including
the decision on whether to buy or rent the farm.
2. Proper sizes of farm business will efficiently utilize the available labor, power,
machinery equipment and capital.
3. The relative importance of diversified enterprises will promote full use of the farm
resources and business stability, including adjustments necessary to meet prospective
changes in the market.
4. The supply of adequate capital and utilization of credit.
5. A study of the best layout of the farm into fields or farmstead.
6. Proper provisions of buildings, equipment, irrigation and other farm requirements.
7. The importance given to conservation.
8. Importance of keeping adequate records to insure a reliable source of information for
planning.
9. Proper attention to the marketing of produce and the purchase of farm supplies.
10. Day to day decisions that has to be made in the farm.

Classes of Risks in Agriculture

1. Those resulting from natural factors such as extreme weather conditions, fire, flood,
earthquakes, and pests and diseases.
2. Those arising from human factors such as carelessness, incompetence, dishonesty, theft,
and political disturbance.
3. Those arising from unpredictability of the market conditions.

Methods of Reducing Risks:

1. Insurance
2. Diversification
3. Future Contract – selling the product at current on agreed price delivering them in some
future time.
4. Flexibility – ease with which the organization of production can be changed.
5. Liquidity – the maintenance of balance of money or assets than can be readily converted
into cash.

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Farm Planning and Budgeting

Use of Farm Plans

1. Serve as a yardstick for performance and accomplishment.
2. Serve as a guide or reminder on the schedule of activities.
3. Provide a basis for evaluation and improvement.
4. Serve as central facilitating aid

Operational Steps in Planning

1. Taking stacks of resources
2. Review and analysis of alternatives
3. Deciding on alternatives and fitting them into one plan
4. Summarizing the resources requirement and output expectation

Elements in Complete Planning and Budgeting

1. Personnel Organization
2. Calendar of Operation
3. Schedule of Labor Requirements
4. Schedule of Supplies Required
5. Schedule of Expected Production and Income
6. Summary budget and test of success

Farm Records

Uses of Farm Records

1. Provide data for farm planning and budgeting
2. Aid to credit, insurance, taxes, and in preparing reports
3. Give data for group action on local or national programs
4. Provide information useful in property valuation

Steps in Taking Farm Inventory

1. List down all farm property
2. Put value on each item
3. List all farm debts and receivables
4. Summarize the information for farm analysis purpose

Methods of Valuation of Inventory

1. Original Cost – actual purchase cost
2. Normal market value – estimated average selling price over a number of years.
3. Present market value
4. Original cost less depreciation

Financial Analysis
current assets
Current Ratio 
a. Liquidity/Solvency Ratio: current liabilitie s
ideal C.R.   2 : 1

current asset  Inventories


b. Quick/Acid-Test Ratio: Current Liabilitie s
Ideal Quick Ratio   1 : 1
c. Net Working Capital = Current Asset – Current Liabilities
(amount of funds available for payment anytime)

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