Management refers to the person or group of persons who coordinate, organize and control the use of other factors of production. In other words, the person(s) who combine other factors of production (land, labour, and capital) to produce goods and services is called the entrepreneur or management. Management determines when to produce, what to produce, type of production, supervises work, recruits workers, and determines what to sell in order to make profit. The profitability of the farm depends on the management.


(i) It involves the management skills of an individual or group of person
(ii) Management influence the organization of other production factors
(iii) It coordinates and controls other factors of production
(iv) It is involved decision making
(v) It determines the level of pay or wages
(vi) Management reward is profit
(vii) The quality of management influences the output
(viii) The cost of management is determined by its quality
In agriculture, the farm manager is usually regarded as the entrepreneur whose duties include the organization, administration, production and marketing of produce from the farm. The reward for management is profit.

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Edwin Mayland,
Minneapolis, Minn.

Thousands of men and women are ambitious with the desire to own
a farm of their own and thereon build a home and a profitable busi-
ness. In the days of homesteading and cheap land this desire could
be realized with very little capital provided one wished to cope with
the hardships and difficulties of frontier life. At present practically
all the available government land has been homesteaded, the frontier
has disappeared and practically all the available agricultural land is
held in private ownership and is increasing in value from the most
remote areas of production or, from the least productive land to the
centers of population and the most highly productive land associated
with the best social advantages.

A normal increase in land values should not alarm the prospective
land owner because such increase is normally based on the added im-
provements to the farm and upon the public and private expenditures
for transportation, for telephones, for schools, for churches, and for
such other private and public improvements and utilities as will make
it possible to maintain a reasonable return per dollar invested coupled
with increasingly better social conditions.

The increased land values however have created at least one out-
standing problem for the one who intends to become a farm owner
and that is the necessity of accumulating a sufficient amount of capital
to meet the required initial payment on the land and to provide the
necessary working capital for the operation of the farm. In negotia-
ting a land deal it has been quite customary between the seller and the
buyer to come to certain so called terms with regard to the amount of
the first payment and subsequent payments and interest rates on the
indebtedness with the usual result that the buyer sinks from 80 per-
cent to 90 percent of his capital in the land and leaves from 10 percent
to 20 percent for working capital and improvements and is conse-
quently handicapped in the operation of his farm and must trust to
luck in making his subsequent payments, which amounts are stipu-
lated in the contract with the provision that if not paid such contract
3hall be null and void, time being the essence of the agreement, etc.



This is a good beginning of a nightmare, for the buyer, which may
last for several years or may end abruptly as the case may be, and
to make the realization of this nightmare as vivid as possible, the
stipulated annual payments are often much larger than the farm can
reasonably be expected to return above the family cost of living, in-
terest on the investment, and the cost of operation*

This condition offers a field for study in farm economics which
should lead to certain standardizations for farm finance applicable to
the different agricultural regions of the United States. This leads up
to the problem which the M. Sigbert Awes Company, in its business
of land settlement in North Dakota, is attempting to solve and which
has created for the company problems in farm economics and farm

This company sells its land under what is known as a Crop Stock
and Insurance Contract. Under this contract the buyer makes a
small initial payment of about 20 percent of the purchase price of the
farm and he is allowed ten years in which to complete the remaining
payments by each year turning over to the company one half of the
proceeds from the sale of crops and livestock and livestock products
which is applied, first, in payment of the interest, and, second, in
re'duction of the principal until paid. The insurance feature provides
that the buyer must insure his life to the company as beneficiary dur-
ing the period of the contract for an amount equal to his indebtedness,
which means that in the event of death the debts on the farm will be
satisfied in full and the family will inherit the farm clear, of all

The success of a project of this kind from a business standpoint
depends entirely on whether the farmers who have bought land under
this contract will make good and the more rapidly they. will make good
the greater the success of the business.

We therefore recognize that this business venture aside from its
economic aspects is a problem in farm management and that the suc-
cess of it is very largely contingent upon a knowledge and administra-
tion of sound principles of farm management applied to every farm
from the time that the new owner takes possession until the farm is
paid for, and it is therefore essential and important that the new
owner receive the proper advice with regard to the best methods of
farming and farm management and that proper direction be given
in the organization of each farm into an efficient business unit as
rapidly as is consistent with the various conditions that may affect
every individual farm. In this connection it should be said that the

mayland: problems of the farm manager. 157

question of the proper organization of the farm does not depend on
the means of the new owner. The company keeps enough capital in
reserve to provide the necessary working capital to begin with and to
put in the necessary improvements to adequately shelter the livestock.
This of course is added to the buyer's indebtedness subject to the
terms of the contract as stated heretofore, or if he is able,to make a
fairly large initial payment on the farm, arrangement is made with
him so that enough of this payment is reserved to provide him with
the necessary working capital. This, then, does not leave any handi-
cap to the immediate procedure with such a program as may seem
the most profitable to pursue in the proper organization of every farm
and naturally brings into prominence a number of problems in farm

Our major problems in farm management have presented them-
selves as follows :

1. The Selection of the Farm.

2. The Distribution of the Investment.

3. The Farm Layout.

4. The Selection of Enterprises.

5. The Distribution and the Adjustment of Enterprises.

6. The Labor Schedule.

The Selection of the Farm.

Under this scheme of land settlement as well as for the individual
farmer, the selection of the land is very important, for the inherent
productivity of every farm bears a direct relation to the success and
expansion of the business, so when selecting a farm careful considera-
tion is given to the following factors :

1. The soil, its type, fertility condition, drainage condition.

2. Amount of waste land which cannot be reclaimed.

3. Distance from market.

4. Distance from school and church.

5. Condition of roads and distance from state and national highways.

6. Condition of improvements.

7. Condition of water supply.

8. Amount of land which can be used for permanent pasture.

9. Approximate amount of capital required for the investment in

working capital and improvements to affect a proper organization

of such a type of farming as would be best adapted to the farm.

Sometimes the price asked for the farm is such as to prohibit the


addition of more capital for improvements and proper equipment
without over-capitalizing the business.

The selection of the farm is a primary and determining step in
farm management for the prospective farmer or for the one who
wishes to change location. This phase of farm management there-
fore must be highly emphasized and the problem analyzed in detail
into its various factors so that the value of a given farm can be pretty
well established and the type of farm organization best adapted to it
can be determined.

The Distribution of the Investment.

In farm organization the proper distribution of the capital is funda-
mental and the solution of this problem naturally follows the question
of the selection of the farm. In this respect the farmer as well as the
manufacturer is dealing with the three fundamental factors of pro-
duction, namely, land, labor, and capital and it is the proper adjust-
ment of these factors that is sought in an ideal distribution of the
factors of production.

The adjustment of the factors of production in a farm business
however is affected by various conditions which change from time to
time' so that a mathematically accurate distribution of the investment
is probably impossible to obtain, and if obtained it would not remain
so very long because of the changes in land values, in labor costs, and
in the cost of equipment that are continually taking place. The effi-
cient farm manager, however, will see. that the distribution of the in-
vestment is correct within certain reasonable limits and he will also
make adjustments in accordance with changing economic conditions.

The factors of production of any farm business may be analyzed
as follows:

The Factors of Production.

I, Land.
II, Labor.

1. Man Labor.

2. Horse Labor.
III. Capital.

1. Fixed Capital.

a. Buildings.

b. Fences.

c. Wells and Water Works:

d. Tile Drains.

e. Irrigation Ditches.

mayland: problems of the farm manager. 159

2. Working Capital.

a. Work Horses.

b. Farm Implements and Machinery.

c. Productive Livestock.

d. Feeds, and Seeds.

e. Cash.

In studying farm organization in North Dakota it appears that its
most outstanding weakness is that the land represents too large a per-
centage of the total investment. This is apparently due, first, to the
fact that among the earlier investors in farms there the tendency was
to buy large tracts of land presumably due to its cheapness. Second,
that the majority of North Dakota farmer immigrants have later and
up to the present time come to the state with grain farming pre-
dominantly in mind and have invested nearly all of their available
cash and credit in land and many of them have consequently been
handicapped for the want of working capital. When lands were
cheap the investment in large tracts did not necessarily mean at that
time that the distribution of the capital was much out of proportion.
However, the proper adjustment in the organization of the farm busi-
ness that should have conformed with the changing economic condi-
tions have failed to take place and this is probably the greatest weak-
ness to-day in North Dakota's scheme of farm management.

Farmers, whether they are operating small or large businesses, must
consider themselves in the role of managers, and their success will
depend upon how well they can combine their land, their labor and
their equipment into an efficient productive unit. This leads to a
number of questions and problems. Just what extent of labor and
tillage of soil will bring the highest efficiency ? Just what is the proper
proportion of machinery, work horses, productive livestock, improve-
ments, labor and land to combine to secure the greatest efficiency?
And if these factors are adjusted at one time they must be readjusted
to conform to new economic conditions. If labor costs rise, it pays
to add more machinery and to plan the whole system of management
so as to use the labor as efficiently as possible. This may also make it
profitable to reduce the cropping area and increase the number of
livestock units and thereby increase the practice of pasturing off crops.

Livestock and the quality of livestock and its relation to the most
efficient organization of the farm business is fundamental. In the
farming of virgin and practically new land in North Dakota livestock
has occupied no piace of importance as an enterprise but as the


process of farming goes on the manager begins to see the necessity of
summer tillage to clean the land and the raising of grass and legume
crops to restore the humus and in so doing he resorts to the raising of
corn and grasses, and in order to create a market for those crops he
resorts to livestock. This leads to the following premises :

•I. If practice is to form a basis for conclusions, the value of live-
stock as an enterprise in connection with tillage and farming of new
lands is doubtful.

2. When the cultivation of the soil has reached a point where the
presence of weeds and the reduction of humus and fertility necessi-
tate summer tillage and the production of grasses and legume crops
and the addition of manure, enough livestock should be secured to
consume the roughage so raised and further to utilize the straw and
other refuse so that the manure resulting from the same can be re-
turned to the land. This is the first step in the efficient utilization of
the labor, land and crops. At this stage of the business the quality
of the livestock and the investment which it represents should be in
accordance with the quality of the feeds raised and the value of the

3. As the value of the land increases and labor and equipment costs
rise, the quality of the livestock should be raised accordingly, for to
use high-priced land and high-priced labor in the production of low
quality livestock is just as wasteful as it would be to use high-priced
labor and equipment in the tillage of land of known low productivity.

The Farm Layout.

The development of the farm layout naturally comes under three

1. The layout of the farmstead.

2. The planning of the farm buildings.

a. Capacities of different buildings.

b. Interior arangement.

3. The layout of the fields.

The practical farm manager desires to develop a layout that will
give him the required building capacity, the most convenient and effi-
cient interior arrangement, and a layout of fields that will be easily
accessible from the farmstead and yet will conform in size and num-
ber to the size of the farm and the distribution of the crops desired.
Would it not be of great value to the farm manager to have definite
information bearing on the most economic and efficient building unit
for given types and sizes of farms for his particular region ?

mayland: problems of the farm manager. 161

The Selection of Enterprises.
In the selection of crop and livestock enterprises we are guided by
experimental data and the experience of successful farmers which I
believe gives us a very reliable basis for the solution of this problem.
However, much, could be done in working out a more definite group-
ing of the varieties of grains the kinds of pastures and forage crops
and the classes of livestock predominantly adapted to the different
regions of a given state.

The Distribution and Adjustment of Enterprises.
After the selection of enterprises comes the question of how much
of each to raise. The crop enterprises must be planned to meet the
following requirements :

1. To provide a good distribution of labor.

2. To provide an ample supply of the best feed crops that it is pos-

sible to raise under the prevailing conditions.

3. To provide for the conservation of soil fertility.

4. To provide for pastures.

5. To allow enough flexibility in the system of cropping so as to make

it possible to readily increase the acreage of such crops as can be
pastured off and to make such other changes as might be neces-
sary to meet new economic conditions.

6. To provide for a definite percentage of cash crops.

The selection of livestock enterprises is largely a problem of rela-
tions, that is, their selection must be largely determined by the kinds
of feed crops that can be raised., the inclinations of the farm owner,
the size of f arjn and the amount and quality of labor under control
of the manager.

The selection of enterprises, their distribution and adjustment,
therefore, is a problem which involves the most careful dovetailing
together of the enterprises in such a proportion as will produce from
every standpoint the most complete and efficient farm unit.

The Labor Schedule.
Is it possible for a farmer who is more or less at the mercy of the
weather to work in accordance with a labor schedule? Or putting
it a little differently, would a labor schedule make it possible for him
to use his labor more efficiently ? - Those who have studied this phase
of farm management will likely answer in the affirmative, and if it is
of much importance what are the determining factors that should be
used as a basis in working out such a schedule? First: A normal


day's work for the various farm operations. Second: The average
date on which the seasonal work begins, and should end and the
average number of field working days in each season. Third: The
latest date at which it is safe and beyond which it is unsafe to plant
crops. Fourth : The proper order or sequence in the planting of the

With such data at hand and knowing the size of his farm and hav-
ing determined what and how much to raise the farm manager can
plan pretty definitely what his labor requirements will be in the field
and much of the miscellaneous work can be done when weather con-
ditions prevent the performance of field work.

It appears, therefore, that a carefully worked out labor schedule
would have a tendency to make the farm manager adjust his farm
operations with his labor supply and he would consequently avoid
prolonging his seeding and planting operations beyond the latest
average date at which it is safe to sow or plant, all of which com-
bines to make his labor more productive.

These problems and other problems are far from being solved and
we look to the investigational agencies of the agricultural colleges
and the United States Department of Agriculture to work out their
solution and to the extension agencies in disseminating the informa-
tion in usable form. If farm management presupposes a knowledge
of all phases of farming, and if it is a science which has for its pur-
pose the coordination of all the factors of a farm business to the end
that the most profitable and the most efficient farm unit may be
evolved, then it must occupy a position of eminence and be given the
means and latitude for consistent practical development commen-
surate with its importance.

I do not believe that we will have developed the most practical and
the most usable information in farm management until every investi-
gational agency or institution is working in accordance with a project
that is consistently planned, first to solve the major problems, second
to determine the type or types of farm organizations that is the most
efficient productive unit and third, the testing and improving of the
principles involved in such types of farm organization on farm man-
agement laboratory farms to be operated under the supervision of the
agricultural colleges. Records representing the average accomplish-
ments of the most successful farms in a given community do prob-
ably not represent the highest attainment in farm efficiency and there
may be need of confirming and even attempting to improve upon the
principles established by such records.




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