Effect on farm management

Abstract

The farm manager is affected by marketing problems per medium of the price mechanism. Should marketing problems cause a fall in the price of farm products the individual farmer begins to take stock of his position. He has a high incidence of fixed costs. Because of this, price falls have a significantly greater effect on earning capacities, than extra profits from price rises. While groups of agricultural producers may in some way cooperate in respect of their common marketing problems, as individuals their prime concern is with the management of their properties. Management usually aims at maximum or near maximum profits. This requires efficient production from the most profitable enterprises. Price changes may therefore require changes in production. Often these changes are merely shifts in emphasis, but sometimes they are the introduction of completely new enterprises. It is these possible changes, and the difficulties and limitations associated with changes, that are the subject matter of this paper.