After reading this article you will learn about the meaning and procedure of farm planning.

Meaning of Farm Planning:

“The farm plan is a process for deciding in the present what to do in the future about the best combination of crops and livestock to be raised through rational use of resources.” When a new enterprise is established a complete and long range planning is undertaken giving basic directions to farming operations, investments patterns, with evaluation of its progress keeping in mind the goals.

The complete plan differs from the annual in the sense that annual plan establishes the general goal of production, probable income and the allocation of budget under different enterprises. In a simple language budget is a statement of expenditure and income. In budgeting exercise the resources are allocated, that is, the capital into various farm enterprises.

Procedure of Farm Planning:

Since, planning and budgeting is meant for the rational use of the farm resources planning assumes a step by step procedure. These are:


(a) Planning the land resources,

(b) Planning the labour resources,

(c) Planning the capital resources.

All these resources are planned for both crop and livestock enterprises.

1. Planning Land Resources:


The farm is endowed with natural resources and the environment is an integral part of the natural resources. Environment is a combination of physical and institutional conditions.

The physical conditions involve all the natural resources—land water, sun’s energy, air, minerals, fauna and flora that grow on land and sea. The institutional part of the environment is created by people that include the psychological and value oriented decisions of how the physical environment is to be used.

Environmental management has become a social and technological problem. In the present day context when the modern techniques used in agriculture has posed a threat to human existence the role of environ-management plays a paramount role and is a significant problem in the world.

In India, there is land constraint the land-man ratio is not a happy one. Farms have become diminutive as the time marches. The number of small and marginal farms are on increase. This is mainly due to the law of inheritance. Under the circumstances the intensive use of land has become the order of the day.


The technological development mostly with the evolution of short duration varieties of crop the multiple cropping or farming is being practiced.

The excessive use of chemical fertilizers and plant protection chemicals have posed a very critical problem to the world at large particularly in connection with the environmental degradation. There is a strong thinking in the direction of organic farming or environment friendly farming approach.

Although we cannot give up the use of chemical fertilizers but it should be combined with organic sources of plant nutrients and strike a balance between the two. Well, the intensive farming needs the support of the infrastructure development as intensive farming is more labour and capital intensive.

In order to provide for the input use liquid capital is needed by the farmer to support the supply of working capital which is now available from the institutional sources which are at the service of the farmers in nationalized commercial banks, regional rural banks, cooperative credit societies.


Processing of the agricultural commodities in the most consumable form will definitely increase the larger share of the producers in consumer’s rupee.

This will increase the income of the farmers and in few years they will be able to stand on their two feet in terms of financing their farm business. Thus, the proper utilization of land resources will be helped by these sub-systems.

Cropping intensity is the index of intensive farming. Farm manager should have a map of the farm and prepared the fertility index of the individual plots, the problems soils like alkaline patches must be taken care of by reclamation, rocky or irradiated soil must be indicated.

The crop rotation should be planned keeping in mind the cropping intensity and soil-climate relationship. The long run policy should be adhered to avoiding in the exploitation of soil fertility.


Soil fertility must be improved by the following practices:

1. Better tillage practices according to needs of crops.

2. Adding of organic matter to restore fertility,

3. Prevention of soil erosion,


4. Adoption a good rotation—shallow rooted crop be followed by deep rooted crop, cereal after legumes etc.

5. Correction of soil sickness,

6. Alkaline or acidic soil be reclaimed by the use of soil amendments for instance alkaline soil be treated with pyrites and acid soil by adding time.

In the case of mixed farming land should have a share of the livestock by way of cropping pattern. Land put under crops in accordance to the need of the livestock or livestock kept in relation to the crop raised on the farm.


To fulfill the social needs the social or agro-forestry practices should be taken up. Waste or unusable land could be put under fodder trees, fruit trees or tress supplying fuel or timber.

Wherever, possible teak or other trees which could supply building materials be planted for the long run economic benefit. The economic principles in the use of land planning are the principles of opportunity cost or the principles of comparative advantages.

2. Planning for Labour Use:

The labour is the primary and active factor of production. The supply of farm labour comes from the farmer’s family including himself and labour hired from outside the family. The family labour utilization in India is a bit complex despite of the size of the family being larger as compared to the western world.

In the upper caste family there is hesitancy in the use of dirty hand method, the educated members of the family may be employed outside the farm locally or out of town.

As in western Uttar Pradesh we find at least one member of the family either in army or police with a very basic advantage that they send regular remittance to the family and the money is used to buy the inputs as recommended by the extension agents or recommended by the scientists.

Children of the family must be excluded from the farm labour force as they must be sent to school for human resource development in the making. Woman labour in agriculture is gaining importance and it’s a fact that the ladies of the family participate in large proportion right from taking care of the livestock to field operation besides their regular performance of duties of home and hearth.


The skilled job should be performed by the family members like tractor and tube-well operation. Head of the family, being an elderly person, contribute to supervisory work on the farm which needs experience and vigilance. Outside the family labour is engaged if he is a permanent labour for ploughing, sowing, manuring, application of fertilizers and plant protection chemicals and irrigation work.

The casual labourers are used for such work, whenever there is a pressure of work, like planting, transplanting, inter-cultural operations and harvesting, loading and unloading of harvested commodities.

Despite of the fact that members of the family look employed on farm work but there is disguised unemployment as the work at the farm does not need that much of family labour and work can be taken care by a limited number of the members of the family.

Planning the Labour Use:

The farm manager makes a plan of schemes of livestock and crop production. Although agricultural operations are seasonal but spread throughout the year as in India there are three crop seasons viz., the Kharif- spreading from mid of June to September, Rabi—from mid of September to March- April, and Zaid—from April to June.

Different crops are cultivated in these seasons. The nature and quantity of crops are cultivated depending on the resources of the farmer. Livestock management is throughout the year.


There are various operation for which labour is required. The quantity of labour is estimated by preparing a “calendar of operation”. In this way the farm manager can estimate the labour requirement for each month and each month is sub-divided into ten days period because the individual operation must be completed within the ten days period otherwise it may affect the output.

In this manner there would be maximum participation of family labour and the peak period could be taken care of by the hired labour. Care should be taken that the permanent labour (family and permanent hired labour) is gainfully employed. Further, the farm manager should use the labour in whatever job he best fits, this will increase the efficiency of the labour.

The labour efficiency is judged by working out the average and marginal productivity of labour calculated in man hours. The average productivity is output- input ratio for the production of each commodity. The marginal productivity is the output obtained due to the additional unit of labour input.

The efficiency of labour depends on his physical health, his mental makeup and his ethical behaviour and finally the skill he has acquired either through formal or informal education or experiences.

Further, the efficiency of labour is directly or indirectly related to the efficiency of the farm manager as to how he organizes the labour in the right jobs and his supervision and administrative talents which comes either from formal education or experience.

Measures of Labour Efficiency are: Total work unit/Man-equivalent


On Dairy Farms:

(a) Number of cows per man or the quantity of milk produced per man or quantity sold per man.

Poultry and Fruit Farms:

(b) On the poultry farm—the number of hens (layers) or broilers per man.

(c) On Fruit Farm:

The number of hectares per man.


The Other Measures are:

The farm manager should adopt the following means for increasing labour efficiency:

(a) Organizing the field after giving full thoughts, choosing the right man for the right job, keeping records of the jobs needed to be performed on the farm.

(b) Supervising the work performance, giving instructions and demonstrating to them by himself doing it, for example, in dairy milk test or pasteurizing the milk etc., boosting the spirit of labour force by reminding them of their commitments, a word in appreciation of good work done by them or if mistakes are done tell them that “to err is human and forgiveness is divine.”

(c) Certain perks and privileges should be provided like housing, medical, recreational facilities. If afforded children’s education.

3. Planning the Capital Use:


Capital is the most scarce commodity in India, therefore, its use must be judiciously done. The return from the capital use must be more than what the farm entrepreneur would get to its money worth in cash by keeping it in bank. The marginal productivity of capital should be more than its cost.

The classical definition of capital is “as all forms of reproducible wealth or goods used directly or indirectly in the productive process”.

Physical capital are in tangible form—these capital have varying life cycle and usefulness. They are:

(a) Durable Capital:

tractor, machinery, equipment, buildings, barns—these last long and can be used time and again.

(b) Consumable Capital:

They are used once for all and they are seeds, fertilizers, plant protection chemicals, feeds and fodder’s, veterinary medicines, etc.

The durable capitals are fixed capital and their cost is calculated in the form of interest and depreciation.

The consumable capital are accounted in accordance to the scale of the production as variable cost.

The two, fixed and variable cost, make the total cost.

Indian farmers are short of capital. Whatever capital is invested it is as a fixed capital in form of land, building and farm implements and equipment. Those farmers who cannot afford to provide for the working capital on their own without borrowing from outside can get the loans from the institutional sources viz., the nationalized commercial banks, regional rural banks, cooperative credit societies.

But they should make the proper use of the loan of which the marginal productivity should be higher than the rate of interest paid out. The economic principle to be applied is the opportunity cost, principles of variable proportions, law of substitution, law of equi-marginal return, cost theory—discounting and compounding.

According to Dhondyall, capital requirement of an individual farm is affected by:

1. Price of land,

2. Quantity and quality of farm buildings,

3. Size of the operating expenses—seeds, manures, fertilizers, plant protection chemicals, labour hired in, etc.;

4. Personal factors—size of the family and standard of living;

5. Climatic factors, and type of farming.

There are two situation pertaining the availability of capital:

1. Limited:

Where capital is limited—under this circumstances the economic principle which is applied is the law of equi-marginal returns.

2. Unlimited Supply of Capital:

Under this the law of diminishing marginal return is applied. That is, capital is used till the MC = MR. In order to fulfill the basic objective of farm management decision making minimization of cost and maximization of profit, it is necessary to watch out the cost of production and returns from the particular enterprise.

There are two cost, fixed and variable costs, the former is there whatever be the level of production but the later varies with the level of production.

The cost per unit could be minimized with increase in the scale of production. It is, therefore, necessary to study the market and in case the demand is favourable and the prices are good the farmer in accordance to the land capability in producing the particular enterprise must increase the scale of production this will naturally reduce cost per unit of output.

Whatever may be nature of farm, crop, livestock or horticultural, or mixed farm, the investment varies accordingly.

Besides land, the following capital assets are found on the farms:

i. Farm Buildings:

Residence, stores and work place, barns, shed for machinery and equipment’s, dairy—if milk processing is undertaken, poultry houses, piggery sheds etc.

ii. Irrigation Facilities:

Tube well, pumping set, masonry well, water channels, drainage facilities etc.

iii. Machinery and equipment’s, tractors, seed drill, harvesters, fruit pickers, ploughs, cultivators and harrows, levelers, rollers, clod crushers etc.

Dairy Equipments:

Churner, milk separator, butter making machine, boiler, pasteurizing machine, freezer, laboratory for quality testing, carts, delivery vans, rickshaw cycles, containers and buckets etc.