STE 4100

(Pengajaran Pengurusan Agroteknologi)

Semester 2 (2017/2018)
LECTURES OUTLINE

CAPITAL & CREDIT

HUMAN RESOURCE MANAGEMENT

MACHINERY MANAGEMENT
 CAPITAL & CREDIT
“CAPITAL” is money invested in the physical inputs used in agricultural production

Source of
“CAPITAL”?

Owner Equity Outside Equity Credit

• Owner’s money from
savings/gift/inheritances or
earn from other
job/investment
• Profit from existing business
Investor’s money contribution:
• Leasing/ renting
arrangement
• Contracting arrangement
• Borrowed money i.e. loans
• Loan classification:
1. Length of Repayment
2. Uses
3. Security
4. Repayment Plan
 Loan Classifications & Repayment Plan
• Short Term Loan: Repayment < 1 year
Length of • Intermediate Term Loan: 1 <Repayment < 10 year
Repayment • Long Term Loan: Repayment > 10 year

• Real Estate Loan: Purchase of land & building

Loan Use of the
• Non-Real Estate Loan: Other business loans
Classifications loan • Personal Loan: Non-business loan for personal assets

• Secured Loan: Borrower to mortgage some assets to

lender as collateral
Security • Unsecured Loan: No mortgage required, hence not
favourable by lenders

Single Payment • Principal + interest payable in one lump sum

• Similar to single payment, but interest is aggregated

Loan Line of Credit based on amount & period it’s transferred to borrower
Repayment
Plans Amortized • Periodic interest + principal payment

Balloon Repayment • Smaller periodic payment + “balloon” size last payment

 Liquidity & Solvency
Liquidity Solvency
• Liquidity is the ability to meet cash flow • Solvency refers to debt capitals used
obligations relative to equity capital
• Factors affecting liquidity: • Solvency is measured based on
DEBT/ASSET RATIO
Non-business 𝑅𝑂𝐴
Business Max debt/asset ratio =
Income & 𝐼𝑅
Growth
Expenditure ROA = % return on total assets less unpaid labour
IR: Interest Rate

Loan
Debt Structure • Max debt/ratio is the level at which return
Characteristics
on equity is equal to zero
HUMAN RESOURCE MANAGEMENT
Farm Labour Planning Process
 MACHINERY MANAGEMENT
Machinery Costs Machinery Selection

Ownership Cost Machinery Size

• Depreciation 1. Determine field capacity
• Interest
• Taxes
• Insurances 1. Compute min field capacity needed
• Housing to complete task in the time
• Leasing available

Operating Costs
• Repair & Maintenance
• Fuel & Lubrications
• Labour to Operate
• Custom Hire/Rental
• Others (machinery specific)
Timeliness
1. Check & balance of owning small vs.
large machinery against timeliness loss
2. Timeliness loss: Yield may deteriorate
over time
 MACHINERY MANAGEMENT
Machinery Acquisition Improve Machinery Efficiency

Purchase from Proper maintenance &

Ownership machines supplier operation

Rent as & when Jointly owned the equipment

Rental required only
with other operators
Long term rental
Leasing from dealer/leasing
Exchange machines with other
company operators
Hire the service of
Custom (machine + Machine replacement if:
Hire operator) • No longer reliable
• Machine is obsolete
• No longer economical
• Cashflow health