MAKERERE UNIVERSITY

SCHOOL OF ECONOMICS
ECO 2115: AGRICULTURAL PRODUCTION AND FARM MANAGEMENT
COURSE OUTLINE
1st Semester 2020/21

COURSE EVALUATION
Course work (One mid-semester exam) 30%
Final examination 70%
Total (composite) 100%

Course Description
The course covers: the theory of the farm, risk and uncertainty in farming, land tenure systems,
credit, mechanization, analysis of the small and large scale agricultural enterprises, investment
analysis, costs of production in different market structures, preparation of feasibility studies,
application of linear programming to agricultural production, farm book-keeping and financial
analysis. Economic analysis of Management and production of agricultural traditional and
non-traditional exports.

Aims
(i) Equip students with the basic principles of farm management and production economics.
(ii) Impart students with appropriate knowledge in mechanization for production, processing
and seed cleaning.
(iii) Enable students prepare feasibility studies, implement projects and evaluate programmes.
(iv) Enable students plan for the agricultural sector and make appropriate policies for the
producers, processors, sellers and exporters.

Learning Outcomes
Upon completion of this course students;
(i) Are able to analyse the effect of the inputs on the production of crops, livestock and other
relevant commodities and services using appropriate methods based on recommended
technologies and practices including the use of regression analysis.
(ii) Have techniques that are required in combining factors of production in producing the
expected output levels for commodities, livestock and their by-products at the minimum
cost.
(iii) Know the methods which are used in selecting between enterprises from the farms and
other relevant businesses.
(iv) Learn techniques of managing risks and uncertainty in farming.
(v) Know the different land tenure systems which are used in Uganda and other relevant
countries and is in a position to develop appropriate policies for utilization of land resources
to ensure their sustainability for future generations.
(vi) Are versed with knowledge about the sources and utilization of credit for investment in
crop and livestock production.
(vii) Are prepared to use linear programming in order to determine their optimal solutions.
(viii) Have appropriate management techniques for producing, processing and marketing
traditional and non-traditional crop and livestock product.
(ix) Are be able to keep proper farm records, prepare primary financial documents and analyse
the financial performance of various enterprises with the view to determining their

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 liquidity, return to investment and other financial indicators including analysis of whether
or not their business is growing.

Course content
1. Farm management-Meaning-Definitions of Farm Management-Scope of Farm
Management – Relationship with other science.
2. Agricultural Production Economics – Definitions – Nature – Scope and subject matter of
Agricultural Production Economics – Objectives of Production Economics – Basic
Production Problems.
3. Economic principles applied to the organization of farm business – principles of variable
proportions – Determination of optimum input and optimum output.
4. Minimum loss principle (cost Principle) – Principle of Factor substitution – principle of
product substitution. Law of Returns – Law of constant returns – law of increasing returns
– law of decreasing returns. Law of Equi-marginal returns – Opportunity cost principle –
Principle of Comparative advantage – Time comparison principle.
5. Factor- product relationship – Law of Diminishing returns – Three stages of production
function – Characteristics – Elasticity of Production.
6. Factor - Factor relationship – Isoquants and their characteristics – MRTS – Types of factor
substitution.
7. Iso–cost lines – Characteristics – Methods of Determining Least-cost combination of
resources – Expansion path – Isoclines – Ridge lines.
8. Product - product relationship – product possibility curves – Marginal rate of product
substitution – Types of enterprise relationships – Joint products -Complementary -
Supplementary – Competitive and Antagonistic products
9. Risk and uncertainty in farming: Distinction between risk and uncertainty – sources of risk
and uncertainty – production and technical risks – Price or marketing risk – Financial risk –
Methods of reducing risk.
10. Type of farming – Specialization, Diversification, Mixed farming, Dry farming and
Ranching – Systems of farming -co-operative farming, Capitalistic farming, collective
farming, State farming and Peasant farming.
11. Farm planning – Meaning– Need for farm planning – Types of Farm plans – simple farm
plan and whole farm plan – characteristics of a good farm plan – basic steps in farm
planning.
12. Farm book-keeping: Farm budgeting – meaning – types of farm budgets – Enterprise
budgeting – Partial budgeting and whole farm budgeting. Preparation of primary financial
statements and analysis of agricultural enterprises with a view to establishing their liquidity,
return to investment, financial performance and growth. Linear programming – Meaning-
Assumptions – Advantages and limitations.
13. Labour management on the farm; Labour requirements, recruiting and retaining farm
employees.
14. Analysis of the performance of Land tenure systems in Uganda; Credit for crop and
livestock producers; Mechanization of agricultural production; Analysis of the performance
of small and large agricultural enterprises; Investment analysis.
15. Resource productivity. Feasibility studies of agricultural products; Application of linear
programming to agricultural production; Analysis of the management and production of
traditional and non-traditional agricultural exports.

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References
1. Doll, J.P., and Orazem, F., 1978. Production Economics: Theory with applications
(Second edition). John Wiley and Sons, New York, USA.

2. Kay, R.D., and Edwards, W.M., 1994. Farm Management (Third edition). McGraw-Hill,
Inc., New York. Upton Martin – Farm management.

3. Turner, J. and Taylor, M., 1998. Applied farm management (Second Edition), Blackwell
Science, Onsey Mead,

4. Richardson, J.H., 1996. The farm as a business: Rural property planning. Inkarta Press,
Port Melbourne.

5. Heady, Earl O, 1964, Economics of Agricultural Production and Resource Use:, Prentice
Hall of India, Private Limited, New Delhi

6. C.E.Bishop, W.D Toussaint, NewYork,1958, Introduction to Agricultural Economic

Analysis: John Wiley and Sons, Inc., London.

7. S.S. Johl, J.R. Kapur, 2006, Fundamentals of Farm Business Management:, Kalyani
Publishers, New Delhi.

8. Subba Reddy, S., Raghu Ram, P. , Neelakanta Sastry T.V., Bhavani Devi I.,2010,
Agricultural Economics, Oxford & IBH Publishing Co. Private Limited, New Delhi

9. Heady Earl O and Herald R. Jenson,1954, Farm Management Economics:, Prentice

Hall, New Delhi,

10. I.J. Singh,1976, Elements of Farm Management Economics: Affiliated East- West
press, Private Limited, New Delhi.

11. Sankhayan, P.L.,1983, Introduction to Farm Management: Tata – McGraw–Hill

Publishing Company Limited, New Delhi,

12. Olson, K.K. Farm Management: Principles and Strategies, Boston: Wiley-Blackwell,
2003.