1. Strategic Decisions:

• It involves heavy investment and have long lasting effect.
• These decisions give shape to overall organization of the business.
• A few of the examples of strategic management decisions are as follows:

a) Size of the farm:

• Depends on a number of the factors such as type of farming area, land irrigated or unirrigated, level of mechanization, intensity of land use, managerial ability of the farmers, etc.

b) Farm labor and machinery:

• Decisions involves the factors to be used in producing a commodity.
• Threshing of rice from 1ha means work for only 1-2 days for the thresher, which is too less to justify the purchase.
• In this situation, it is better to hire thresher for threshing rice than purchase. In the absence of sufficient custom work, the purchase of power thresher may not be economical and consistent with the opportunity cost of capital.

c) Construction of buildings:

• Decisions involves heavy investment which becomes fixed resource for the business, Kind of buildings, for the present pattern and level of crops or livestock produced.

d) Irrigation, conservation and reclamation programmes:

• Decisions on irrigation Programmes are very crucial because it involve heavy investment it give a flow service over a long time and also improve the productivity of other associated inputs.

2. Operational/ Production Decisions:

• Such decisions are continuously made in the day-to-day operations of the farm business.
• The frequency of these decisions is more as compared to strategic management decisions but the investment involved is relatively small and impact short lived.
• These decisions are: What to produce? How much to produce? How to produce? When to produce?

a) What to produce? (Selection of enterprises):

• The law of comparative advantage will help decide here the crops to be grown or the livestock to be raised.
• For this, information on crop rotations, new varieties and physical requirements of different enterprises is essential.

b) How much to produce? (Enterprise mix):

• It involves degree of specialization or diversification. Combination of crop and livestock enterprises will depend upon the level of resources available and land use capabilities in addition to existence of complementary and supplementary relationships.
• Level of each enterprise will be decided on the basis of principle of substitution i.e. the scarce farm resources are first considered for those enterprises which are most profitable and then the next best profitable enterprises which are considered for inclusion.

c) How to produce? (Selection of least cost/efficient method):

• Its objective is to select the least cost or most efficient method keeping in view the amount of work to be done on a particular farm situation, the least cost method.

d) When to produce? (Timing of production):

• It deals with whether to produce normal, early or late variety of a crop or what combination thereof, because differences in yield in different periods or may not be balanced by the differences in prices during these periods.

3. Administrative Decisions:

a) Financing the farm business:

• Farm manager has to decide which agency will be more economical and efficient for getting loan when needed and of the type needed.

b) Supervision of work:

• The farm manager has to make sure that every job is done in time in the desired way and operationally most efficiently.

c) Accounting and book keeping:

• Involve collecting, synthesizing and analyzing data to evaluate performance for making future decisions.
• Decision is to be made on the kind of farm records, time allocation and money to be spent on this activity; balancing these inputs with the utility of farm records maintained and analyzed.

d) Adjustments to government programs and policies:

• Government programs and policies place restrictions on farm production and marketing programs.
• The farmer has to decide on the level of production and resource use consistent with price and procurement policies.

e) Production for home consumption and the market:

• The farmer has to decide the proper combination of products for home consumption as well as for the market to achieve maximum family satisfaction.

4. Marketing Decisions:

• Decisions on buying and selling i.e., to buy seeds, fertilizers, livestock equipment’s etc., from the least cost source and in least cost way and to sell the farm produce in a manner to get maximum profit are some of the very important decisions a farmer has to make.

a) Buying (When, Where and How to buy?):

• Farmers purchase a number of inputs for production of agricultural commodities.
• Attempt is always to purchase at the least cost. He, therefore, faces such questions as from where, When and How to buy? Suppose he has to purchase poultry feed to meet his requirements for one year.
• Choices before him are to:

i) buy maize grain immediately after harvest to get advantage of seasonal low prices and meet storage costs over time;

ii) spread his buying over different periods; pay higher prices and avoid storage costs and risk,

iii) purchase in bulk or in small lots at a given time;

iv) purchase processed poultry feed or different components separately and mix them himself.

• The farmer has to take decisions that make the whole differences for success or failure of their business.

b) Selling (When, Where and How to sell farm products):

• He can sell in the lean period when the prices are higher. Other alternatives are to sell immediately after harvest at lower prices.
• Whether to sell in the village or city market, whether to sell as raw form or processed product are some other such decision the producer seller has to make.