How to Write a Farm Business Plan

Farm tractor image by Rido from Fotolia.com

Every successful farming operation begins with a well thought-out, environmentally friendly and sustainable business plan. Farming requires determination, commitment and careful preparation prior to investment. Starting a new small farm business has many inherent risks. Weather, crop prices, fuel costs and market trends are beyond the individual farmer's control. Many other risks can be eliminated or managed by following a long-term, carefully constructed farm business and operation plan.

Every successful farming operation begins with a well thought-out, environmentally friendly and sustainable business plan. Farming requires determination, commitment and careful preparation prior to investment. Starting a new small farm business has many inherent risks. Weather, crop prices, fuel costs and market trends are beyond the individual farmer's control. Many other risks can be eliminated or managed by following a long-term, carefully constructed farm business and operation plan.

Assemble all land usage history, water rights, permits and licenses that apply to your farm operation. List all assets, including the acreage and legal description of the farm property. Include a description and valuation of all outbuildings, such as barns, storage buildings, silos, granaries, garages and living quarters. List all presently owned or rented equipment with current valuations and replacement costs. Prepare a projection of anticipated land or equipment requirements. Provide a complete explanation of how this land or equipment will be utilized and the expenditure justified.

Determine the organizational structure of your farm business. The organizational structure is an integral part of your farm business plan. There is lots of work to do and you can't do it all yourself. Evaluate the amount of workers needed to meet your production goals. Decide if you will be using family members for labor or hiring outside employees.

Consult a lawyer or tax adviser to decide if your entrepreneurial efforts are best suited to a sole proprietorship, partnership or corporation. A lawyer can be located by contacting your state bar association or contact the National Bar Association at nbacls.com for a referral. A tax adviser or CPA can be found through the American Institute of Certified Public Accountants.

American Institute of Public Accountants 220 Leigh Farm Road Durham, NC 27707-8110 919-402-4500

Prepare a mission statement for your farm operation laying out short-term and long-term goals and concise plans for how you will meet your production objectives. Provide complete details on cost of seed, livestock, building requirements, equipment, labor, land, supplies and all other expenditures associated with your farm operation. Include insurance, income tax, property taxes, sales taxes, fuel taxes, utilities, freight, professional services, marketing, sales and delivery of your crop or product.

Equip yourself with knowledge. Study market trends, annual crop production, weather patterns and any other variables that could effect the success of your farm operation. Have a backup plan to deal with crop failures, drought, debt service, market declines and increased cost of doing business. Incorporate these trends and contingencies into your farm business plan. Include in your business plan a capital reserve fund to be increased annually from farm profits. The New England Farm Institute at smallfarm.org provides a wealth of farming operation resources, sample farm business plans and referrals to farm operation mentors.

Evaluate the value of organic certification. Consumers, concerned with the pesticides and herbicides found in food, are demanding healthy, natural and organic food products. If you plan to grow organically, list the requirements and cost for certification in your farm business plan and outline how you will meet those objectives. Contact Food Alliance at foodalliance.org for information and an application for certification form.

Food Alliance 1829 NE Alberta, Suite 5 Portland, OR 97211 503-493-1066

References

About the Author

A passionate writer for more than 30 years, Marlene Affeld writes of her love of all things natural. Affeld's passion for the environment inspires her to write informative articles to assist others in living a green lifestyle. She writes for a prominent website as a nature travel writer and contributes articles to other online outlets covering wildlife, travel destinations and the beauty of nature.

Photo Credits