• It helps the farmer to decide which farm plan or agricultural enterprise to choose.
• It allows the farmer to compare the profitability of different enterprises. • It makes the preparation of whole farm budgets easier.
• It provides documentary evidence for financial institutions when a loan application is made.
• It makes it easier for the farmer to control the finances of the farm.
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• Farm planning is essential for the proper use of resources and the development of agricultural enterprises.
• Farm planning may be short-term for enterprises taking less than a year or for those that can be completed in a short production cycle.
• Long-term planning involves enterprises which take from 1 to 3 years to come into full production.
• Farm record-keeping is the process of registering essential data of agricultural enterprises.
• Farm records provide valuable information for farm planning, decision-making and budgeting. They are classified into: inventory, production, financial, labour and consumables.
• Gross farm income refers to the total income from all the farm enterprises. • The net income is the gross income minus the total costs of the inputs.
• Budgeting is estimating the quantity of inputs, costs, outputs, income and profit of a farm plan.
• A complete budget, sometimes known as a whole farm budget or total budget, is usually drawn up when a farm has a new owner or is under new management. It consists of all the assets and liabilities.
• A partial budget is drawn up when there is a proposed change in the nature of an agricultural enterprise, e.g. increasing the number of livestock.
• Decision-making in agriculture is the process of identifying, analysing and selecting a course of action to solve a problem.
• Sound decision-making results in farm profitability and development of agricultural business.
1T01 What to produce? Why choose the product? How much to produce? How
to achieve the production?
ITU Farm planning removes uncertainty, organises the use of farm resources,
focuses on production and enables the farmer to apply for a loan. 1103 Short-term planning is for projects which last for a year or less, for
crops and for rearing livestock with a short production cycle. Long-term planning is for projects lasting from 1 to 3 years.
ITN Four from: easy to do and keep; serve a definite purpose; simple, useful
and effective; be accurate and complete; be kept consistently; be easily accessible.
1TC)5 Four from: farm inventory; production; breeding; financial; labour;
consumables.
11116 Production records are used to follow the progress, determine the performance and productivity of different crop varieties and breeds of animals.
Examination-style
questions
7 - Farm organisation and planning
1107 Farm income is earned by producing and selling commodities. Gross income is the total income gained by selling the product. Net income is the gross income minus the total costs of the inputs.
IT08 The income from the farm is used to purchase the necessities for the family, educate the children, invest in savings and buy the inputs for continuation of the farm business.
1109 Budgeting is the process of estimating the total quantity of inputs, costs, outputs, income and profits for an enterprise.
11010 A complete budget is prepared when a farm has a new owner or when it is under new management. It can be prepared when an existing farm is completely re-organised.
11011 The important features of a partial budget are the additional costs and reduced income and the additional income and reduced costs.
11012 Decision-making in the Caribbean is affected by limited resources, changing weather conditions, natural disaster, changing markets and the unpredictable nature of production.
11013 Choosing the right course of action in solving a problem, farm profitability and development of the business.
11014 It helps the farmer to decide which enterprise to choose in order to be profitable.
Multiple Choice Questions
1. Long-term planning is used for the production of:
A broilers B milk C lettuces D tomatoes
2. Which type of farm records are used for recording the amounts of fertiliser used?
A inventory B production C financial D consumables
3. A farming enterprise recorded that the income from the sale of broilers was $80 000. The fixed costs were $2500 and the variable costs were $26 000. The farm profit was:
A $80 000 + $2500
B $80 000—$2500
C $80 000 — $28 500 D $80 000 — $26 500 4. Gross margin is:
A gross income — variable costs
B gross income — fixed costs
C gross income — total costs D gross income — net income 5. Variable costs change with:
A the market price
B the depreciation of the machinery
C the level of production D the rent of the land
Short answer and essay-type questions
6. Discuss the statement 'decision-making is regarded as the heart of farming'.
7. (a) Draw a diagram to show the stages in the process of decision-making that farmers are advised to adopt.
(b) Describe TWO beneficial effects of sound decision-making.
8. (a) Using examples, differentiate between: (i) short-term planning, and
(ii) long-term planning. (b) State the major objective of:
(i) short-term planning, and (ii) long-term planning.
(c) Why should farmers include one or two short-term farm enterprises in long-term agricultural projects?
9. (a) Explain the meaning of 'budgeting' in relation to farming. (b) State the importance of 'budgeting' in agriculture.
(c) Differentiate between (i) a complete budget, and (ii) a partial budget.
10. (a) Differentiate between (i) a farm plan, and (ii) a farm budget.
(b) Explain why it is important for the farmer to prepare both a farm plan and a farm budget.
11. (a) Explain the meaning of the term: 'farm record-keeping'. (b) What are FIVE major characteristics of good farm records? (c) State FIVE advantages of farm record-keeping.
12. (a) List THREE major kinds of financial records which farmers pursuing large-scale agribusinesses should keep.
(b) Differentiate between (i) assets, and (ii) liabilities.
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