Economic
and Business Practices in Farm Planning and Production
by Sydney C. James and Phillip R. Eberle
Iowa State University Press,
2000.
Farming is risky business. Not only
are farms subject to production variabilities like weather, disease and
insects, but they are also subject to mechanical failures of equipment,
market price fluctuations, bank financing policies, government rules and
regulations, and human breakdowns in the form of illnesses and injuries.
How do you manage these risks to ensure
long-term profitability and survival?
The authors of Economic
and Business Practices in Farm Planning and Production,
a newly published agricultural guide and textbook outline several tried
and true strategies for reducing risk. To limit exposure to yield variability,
they recommend:
-
Selecting genetically stable lines of crops
and livestock.
-
Selectng less variable enterprises. "Generally,
income from field crops exhibits less variability than income from row
crops, and grain crops are less variable that vegetable crops. Beef cows
have a more variable income flow than dairy cows."
-
Diversification by adding enterprises to the
farm product mix.
-
Controlling the environment in ways that reduce
production variability, such as othe use of orchard heaters and wind machines.
-
Flexibility in the use of practices or procedures.
-
Purchasing production or yield Insurance.
In their chapter on "Developing Marketing
Plans," Sydney C. James and Phillip R. Eberle explain how to reduce market
and price risk by setting clear marketing objectives. Strategies for achieving
these objectives include:
-
Spreading sales throughout the year rather
than selling all of the crop or livestock at the same time.
-
Utilizing hedging and options in the commodity
futures market to narrow the sales price range.
-
Contract sales of products sold in advance
of harvest at a fixed price.
-
Participation in government programs with
a floor price.
"The best approach to reducing yield variability
is to be technically competent and artfully efficient," the authors point
out. "No risk-preventative measure or gimmick can fill the void of not
understanding the science of the products being raised and being wise in
applying efficient and timely production practices."
In addition to marketing and risk management,
the chapters in this text detail how to set up a farm business acounting
system, acquire needed resources and financing, manage labor and optimize
after-tax income.
Back to the Book
Stall |
Economic
and Business Practices in Farm Planning and Production
A textbook for agriculture
students at the junior or senior level as well as a resource for
practicing farmers and ranchers.
Chapters
One. The Role of Farm Management
Two. Financial Accounts
Three—Financial Accounts
Four—Financial Accounts
Five—Using Budgets in Farm Planning
Six—Economic Principles of Production
Seven—Developing Marketing Plans
Eight—Adjusting for Risk and
Uncertainty
Nine—Organization and Ownership
of the Farm Business
Ten—Financial Planning for Ownership
and Operation
Eleven—Acquisition of Farm Machinery
Services
Twelve—Acquiring and Managing
Labor
Thirteen—Income Tax Management
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