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UBC Theses and Dissertations

Linking the Canfarm Farm Record System to a linear programming farm planning model Kendon, Richard P.


The farm record keeping system is frequently used by the farm business manager for historical accounting, mainly to satisfy institutional requirements for information, particularly that of taxation. Little emphasis has been placed on the record system as an aid in forward planning. Farm planning aids frequently ignore the record keeping aspect of farm business management and are generally unrelated to record keeping systems used on the farm. The Canfarm Farm Record System and the various Canfarm Farm Planning Packages are likewise unrelated. This lack of a comprehensive Managerial Information and Decision System for the Canadian farm business manager may, in part, account for the slow rate of adoption of computerized record keeping systems and farm planning aids. The objective of this study was to integrate the Canfarm Farm Record System with a farm planning model, in order to suggest a format for the future development of an extension oriented Managerial Information and Decision System. The specific objectives were: 1) to identify the Canfarm Farm Record System, the statements that are generated from the Record System and the accounting items which make up these statements; 2) to construct, document and validate a linear programming farm model which incorporates the information contained in the Canfarm Farm Record System and generates output in statements that are consistent (identical) with the Record System statements; and, 3) to develop recommendations for standardization of projected financial reports that existing models could adopt, and which could be incorporated into future models. A significant cost of using any system is the investment in time required to become acquainted with that system. Consequently, the fewer the concepts to be learned, the lower would be the cost of learning for both the extension agent and the farm business manager. In addition to reducing the number of new concepts, integrating a record system with the planning function provides the control link through the comparison of planned versus actual values that is not available with fragmented packages. These considerations, in conjunction with management theory and theories of the firm formed the theoretical background to this study. Linear programming was chosen as an appropriate solution method due to its lack of conceptual complexity, the availability of a suitable algorithm and its maximizing capabilities. The Canfarm Farm Record System was described in terms of its accounting concepts. The flow of data was shown, from the farmer's journal entries, through the various detailed reports, to the summary financial statements and to the Balance Sheet. Four reports, the Farm Operating Statement, the Income Statement, the Statement of Assets, Liabilities and Owners Equity (Balance Sheet), plus the Cash Flow Statement, were chosen as the basic reports to be generated by the model. The empirical work was shown to consist of several stages, from the capturing of the historical records, the formulation of the farm plan, the generation of the LP matrix, to the solution of the projected farm plan. A report writer converts the output from the LP solution and produces the four financial statements. The final stage is the control link, in which the projected reports are compared to the actual records as they become available. The model was designed to be applicable to a variety of farm planning situations, in addition to being able to link up with other models. It was therefore subjected to several tests, including a simulation run using case farm data from the Canfarm Farm Record System to test the model structure, integration with two different farm planning models to demonstrate its flexibility and comparison with the same data fed through the Canfarm Farm Record System. Once this stage was reached, other potential applications were outlined and then a recommendation was proposed for the adoption of a standardization base for future models as well as for wider applications of this model.

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