The purpose of the American Journal of Agricultural Economics is to provide a forum for creative and scholarly work in agricultural economics. Ever since the advent of scientific concern for farm management early in this century, there has been a large gap between the theory of farm management in terms of management by objectives as espoused by 'experts' (i.e., academics, government agents and other advisory professionals) and its practice by farmers. A vast literature and a myriad of texts have been generated, particularly in industrial management. These constraints, theoretically, could include not only resource constraints but also technical constraints to ensure that the farm plan meets, if the manager wishes, such criteria as income stability over time, diversity in production, flexibility in product disposal, intra-year dispersion of income, resource sustainability and environmental compatibility. Agriculture comparatively covers a vast subject area than farming. Second, in contrast to industrial production, in many agricultural production activities, time may be a variable input under the manager's control, i.e., a decision variable to be manipulated by the farmer on the basis of its opportunity cost. Nor can production be easily speeded up (or slowed down) in response to favorable (or unfavorable) prices. Such an approach also has the advantage of indicating, in terms of forgone profit, the opportunity cost of pursuing non-profit goals. Extensive management of livestock describes a feeding pattern with free ranging and grazing pattern. Case, H.C.M. These premises include that the individual farm functions In other words, it is the act of foregoing current consumption. Intra-system resources available to the farm system may be categorized as either physical or non-physical. The behavioural approach emphasizes knowledge about how people behave and why they act as they do. Second, government needs to ensure that it has liaison linkages, preferably of a formal nature, with small farmers through their organizations. Farm management involves a continuous process of economizing and therefore the relevant basic theory of farm management is economics. AECO 241 – FARM MANAGEMENT AND PRODUCTION ECONOMICS 2(1+1) THEORY Sl No. Williams (1957). Economist Alfred Marshall first differentiated between internal and external economies of scale. It is abstract and consists of individuals' motivations and behaviour, informal relationships, feelings of status, power and influence. To allow for risk considerations, probably the best approach is to view the farm manager as possessing a multiattribute expected utility function specified in terms of the selected strategic goals, i.e., a function specifying the amount of satisfaction obtainable from the farm system through any combination of goal achievements. Difficulties lie in (a) the free-will and non-deterministic attributes of the farm system; (b) the complexity of purpose and operation that the farm system may possess; and (c) the uncertain dynamic character of the farm system and its environment. Beyond ensuring that policies do not reflect urban bias, there are four broad opportunities open to government to help enhance the quality of small-farm management. Jensen (1954). 'Farm Management: The State of the An (or Science)', Journal of Agricultural Economics 30: 277-91. Time gives the farmer the opportunity to sequence input injections and/or output harvests in varying ways. To begin, consider the following representative sampling of twentieth-century definitions of farm management as proposed in relation to commercial family farms. It entails the collection of relevant feedback information, the analysis of such data and, as need be, the taking of corrective action (Barnard and Nix 1973). On this basis Production function is classified into two types: Production function short run production function- Time when one input (say, capital) remains constant and an addition to output can be obtained only by using more labour. This is in contrast to the general management definitions cited earlier. On the one hand it provides the opportunity to correct or improve decisions over time but, on the other hand, it greatly increases the possible volume and complexity of decisions. production, farm engineering and resource management. In addition, a great array of more general software is available commercially for on-farm financial recording and analysis and also for risk analysis. The Farming Game Now, Cambridge University Press. Hence, management by objectives relates not just to final objectives or strategic goals but to the whole means-end hierarchy of objectives or goals. Even on small family farms, the 'grape vine' is pervasive - though less so than in large farm systems. The Farmer as Manager, 2nd edn, CAB International, Wallingford. In contrast to the cited definitions, this statement either recognizes or better emphasizes: first, that farm management is not farm management research, teaching or consulting; second, the dynamic nature of the farm system and its environment; third, the fact that the farm manager deals not just with resources but also faces the challenge of situations to be met and opportunities to be seized; fourth, the active role of manipulation as distinct from the more passive role of merely organizing and controlling; fifth, the uncertainty and consequent risk present in the farm manager's decisions, thereby implying attempted (rather than sure) achievement of objectives based on personal preference and subjective judgement; sixth, by referring to goals rather than profit, the reality of non-profit goals is recognized; further, in the family-farm context, the nonsense of endeavouring to differentiate between the farm as a business and as an economic entity is done away with - the latter subsumes the former and, in our judgement, must be the context in which farm management operates. 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