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                         ACHARYA N.G.RANGA AGRICULTURAL UNIVERSITY 
                           DEPARTMENT OF AGRICULTURAL ECONOMICS  
                    
                    
                    
                    
                                        LECTURE NOTES 
                                       Course No. AECO 241 
                            Farm Management and Production Economics (1+1) 
                                               
                                               
                                               
                                          Compiled by 
                                      Dr.T.V.Neelakanta Sastry 
                                           Professor 
                                 Department of Agricultural Economics 
                                   S.V. Agricultural College, Tirupati 
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                   AECO 241 – FARM MANAGEMENT AND PRODUCTION ECONOMICS 2(1+1) 
                   THEORY 
                   Sl  No.   Topic 
                   1     Farm management  - Meaning  – Definitions of Farm Management – Scope of Farm 
                         Management – Relationship with other science 
                   2     Economic principles applied to the organization of farm business – principles of 
                         variable proportions – Determination of optimum input and optimum output 
                   3     Minimum loss principle ( cost Principle) – Principle of Factor substitution – principle 
                         of product substitution 
                   3     Law of Equi-marginal returns – Opportunity cost principle – Principle of Comparative 
                         advantage – Time comparison principle 
                   4     Type of farming – Specialization, Diversification, Mixed farming, Dry farming and 
                         Ranching – Systems of farming  -co-operative farming, Capitalistic farming, collective 
                         farming, State farming and Peasant farming 
                   6     Farm planning – Meaning – Need for farm planning – Types of Farm plans – simple 
                         farm plan and whole farm plan – characteristics of a good farm plan – basic steps in 
                         farm planning 
                   7     Farm budgeting  – meaning – types of farm budgets – Enterprise budgeting – Partial 
                         budgeting and whole farm budgeting. Linear programming – Meaning- Assumptions – 
                         Advantages and limitations 
                   8     Distinction between risk and uncertainty  – sources of risk and uncertainty  – 
                         production and technical risks – Price or marketing risk  – Financial risk – methods of 
                         reducing risk 
                   9     Agricultural Production Economics – Definitions – Nature – Scope and subject matter 
                         of Agricultural Production Economics – Objectives of Production Economics – Basic 
                         Production Problems 
                   10    Law of Returns  – Law of constant returns  – law of increasing returns  – law of 
                         decreasing returns. 
                   11    Factor  – product relationship  – Law of Diminishing returns  – Three stages of 
                         production function – Characteristics – Elasticity of Production 
                   12    Factor – Factor relationship – Isoquants and their characteristics – MRTS – Types of 
                         factor substitution 
                   13    Iso –cost lines – Characteristics – Methods of Determining Least-cost combination of 
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                                  resources – Expansion path – Isoclines – Ridge lines 
                          14      Product – product relationship – product possibility curves – Marginal rate of product 
                                  substitution  – Types of enterprise relationships  – Joint products  -Complementary  - 
                                  Supplementary – Competitive and Antagonistic products 
                          15      Iso – revenue line and characteristics – Methods of determining optimum combination 
                                  of products – Expansion path – Ridge lines 
                          16      Resource productivity – Returns to scale 
                           
                          PRACTICALS 
                          S No    Topic 
                          1-4     Visit to farm households  – collection of data on cost of cultivation of crops and 
                                  livestock enterprises 
                          5       Determination of optimum input and optimum output 
                          6       Determination of optimum combination of products 
                          7       Computation of seven types of costs 
                          8       Computation of cost concepts related to farm management 
                          9       Farm inventory 
                          10      Methods of computing depreciation 
                          11– 12  Farm financial analysis – preparation of Net worth statement and its analysis 
                          13– 14  Preparation of farm plans and budgets – Enterprise and partial budget 
                          15      Visit to college farm 
                          16      Final Practical Exam 
                                   
                          REFEERENCES 
                             1.  Heady, Earl O,  1964,  Economics of Agricultural Production and Resource 
                                Use:, Prentice Hall of India, Private Limited, New Delhi 
                             2.  C.E.BISHOP,  W.D TOUSSAINT,., NEWYORK,1958,  Introduction to 
                                Agricultural Economic Analysis: John Wiley and Sons, Inc., London 
                             3.  S.S. Johl, J.R. Kapur ,2006, Fundamentals of Farm Business Management:, 
                                Kalyani Publishers, New Delhi 
                             4.  Subba Reddy, S., Raghu ram, P. , Neelakanta Sastry T.V., Bhavani Devi 
                                I.,2010,  Agricultural Economics,    Oxford & IBH Publishing Co.  Private 
                                Limited, New Delhi 
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                 5.  Heady Earl O and Herald R. Jenson,1954, Farm Management Economics:, 
                  Prentice Hall, New Delhi, 
                 6.  I.J. Singh,1976,  Elements of Farm Management Economics: Affiliated East-
                  West press, Private Limited, New Delhi 
                 7.  Sankhayan, P.L.,1983, Introduction to Farm Management: Tata – Mc Graw – 
                  Hill Publishing Company Limited, New Delhi,