Short notes on Farm planning & Budgeting.
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Farm Budgeting: Definition, Importance, Objectives and Requirements!
Definition:
1. It is the process of estimating costs, returns and net profit on a farm and involves managerial principles of input and output in relation to the production.
2. It is the process of preparing advance estimates of finance for plan before putting it into effect.
Factors Affecting Budgeting:
ADVERTISEMENTS:
Budget estimates are subjected to a wide range of errors due to several factors such as:
1. Unforeseen circumstances like abnormal weather.
2. Outbreak of diseases.
3. Changes in market conditions of products and feeds.
Importance:
ADVERTISEMENTS:
1. Budgets can be of considerable value as guide to policy and plans for economic gains.
2. Helpful in preparing statements of receipts and expenditure.
3. Helpful to draw alternate plans of quick improvement on the existing plan.
4. Helpful in analysing business carefully.
Objectives:
1. To serve as basis of farm plan preparation and its evaluation.
2. To help farmer in adopting such farming methods in meeting market demands which can give higher returns on his investment
Requirements of Budgeting:
1. Data of input and output estimates.
2. Clear distinction between fixed and semi-fixed costs.
3. Recurring or variable items of expenditure.
ADVERTISEMENTS:
4. Market prices of raw material like feeds and finished products.
Types of Budgets:
1. Complete budget.
2. Partial budget.
Budgeting Methods:
1. Budgeting for starting a farm.
2. Budgeting for year to year planning.
3. Budgeting for a relatively minor change in practice influencing smaller section of the farm organisation—such as installing a new machine, expansion of a unit etc.
4. Budgeting for a drastic change in system.
Process of Budgeting:
1. Making a full appraisal of amount and production of the existing farm resources-land, livestock, machinery, buildings, labour and management ability of personnel.
2. Systematic study of crops practices for fodder condition of livestock, prevailing prices of farm product and feeds.
3. Preparation of balance sheet with estimates of assets and liabilities to provide a net worth of farm business.
Advantages of Budgeting:
1. Evaluate the old plan and guide the farmer to adopt new plan with advantage.
2. Makes farmer careful of leakage or wastes in the operation of farm.
3. Gives a comparative study of receipts, expenses and net earnings on farm.
4. Helps in formulating rational dairy farm policies.
5. Guides and encourages the most efficient and economic use of available resources.
6. Serves the base for future improvements in farm practices.
Definition:
1. It is the process of estimating costs, returns and net profit on a farm and involves managerial principles of input and output in relation to the production.
2. It is the process of preparing advance estimates of finance for plan before putting it into effect.
Factors Affecting Budgeting:
ADVERTISEMENTS:
Budget estimates are subjected to a wide range of errors due to several factors such as:
1. Unforeseen circumstances like abnormal weather.
2. Outbreak of diseases.
3. Changes in market conditions of products and feeds.
Importance:
ADVERTISEMENTS:
1. Budgets can be of considerable value as guide to policy and plans for economic gains.
2. Helpful in preparing statements of receipts and expenditure.
3. Helpful to draw alternate plans of quick improvement on the existing plan.
4. Helpful in analysing business carefully.
Objectives:
1. To serve as basis of farm plan preparation and its evaluation.
2. To help farmer in adopting such farming methods in meeting market demands which can give higher returns on his investment
Requirements of Budgeting:
1. Data of input and output estimates.
2. Clear distinction between fixed and semi-fixed costs.
3. Recurring or variable items of expenditure.
ADVERTISEMENTS:
4. Market prices of raw material like feeds and finished products.
Types of Budgets:
1. Complete budget.
2. Partial budget.
Budgeting Methods:
1. Budgeting for starting a farm.
2. Budgeting for year to year planning.
3. Budgeting for a relatively minor change in practice influencing smaller section of the farm organisation—such as installing a new machine, expansion of a unit etc.
4. Budgeting for a drastic change in system.
Process of Budgeting:
1. Making a full appraisal of amount and production of the existing farm resources-land, livestock, machinery, buildings, labour and management ability of personnel.
2. Systematic study of crops practices for fodder condition of livestock, prevailing prices of farm product and feeds.
3. Preparation of balance sheet with estimates of assets and liabilities to provide a net worth of farm business.
Advantages of Budgeting:
1. Evaluate the old plan and guide the farmer to adopt new plan with advantage.
2. Makes farmer careful of leakage or wastes in the operation of farm.
3. Gives a comparative study of receipts, expenses and net earnings on farm.
4. Helps in formulating rational dairy farm policies.
5. Guides and encourages the most efficient and economic use of available resources.
6. Serves the base for future improvements in farm practices.
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