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Economic and Business Practices in Farm Planning and Production

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. 



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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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