Farm and Ranch Management- Exam 1

Number of farms has been _____ but amount of land has _______. Size of fames has _______

decreasing, stayed constant, increasing

Why is the size of farming operations been increasing?

labor saving technology, desire for higher standard of living, newer technology designed for bigger farms.

Advantages of newer technology

increased production efficiency, increased livestock performance, GPS

What is vertical integration?

Controlling multiple stages of supply, same product, selling at different stages

Some ways farmers are protected against foreign competition

tariffs, quotas, sanitary regulations

Planning

Most fundamental. Choosing a course of action, policy or procedure. Analyze alternatives

Implementation

after plan is created, put the plan in action.

Control

monitoring results after implementation

Adjustment

After information has been recorded, make adjustments and fine tune plan

Strategic Farm Management

Long term planning

Tactical Farm Management

Short term planning

Internal Scanning

Assess business resources and advantages. Ex: physical resources owned or available, human resources, financial resources, competitive advantage

External Scanning

Survey business environment. Ex: consumer tastes, markets, availability of new resources, government regulations

Mission Statement

A couple of sentences that define the mission of business

Tactical Management

machinery to buy, when to market crops, feed for livestock, new hires

Economic Principals

provide manager with a set of procedures and rules for decision making

Production Function

Systematic way of showing the relationship between resources and products. (level of inputs)

Average Physical Product (APP) aka yield

average amount of output produced per unit.

total physical product/input level

Marginal product analysis

to calculate difference between marginal and new value

Marginal Physical Product (MPP)

the change in total physical product/change in input level

Diminishing Marginal Returns

what happens to MPP as an additional input is added

MPP gets _____ as crop nears its biological capacity

smaller

Stage 1

additional units of input causes average physical product to increase

Opportunity Cost

not included in accounting expenses (hypothetical)

Fixed costs can be either ______ or _______

cash or noncash

Non cash Fixed Costs

Depreciation, interest, operator labor, owned land

Cash fixed assets

Borrow interest, wages, purchased feed

Fixed costs

costs with associating with owning a fixed input

Production rules for the long run

selling price is greater than ATC

Input price is _______

marginal input price

What is selling price/output cost

Marginal Revenue

When MC=AVC

means AVC is at minimum