farm business school : farm business plan
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FARM BUSINESS SCHOOL : FARM BUSINESS PLANFARM BUSINESS SCHOOL : FARM BUSINESS PLAN
MS. NEMY G. SUNGCAYADA-AMAS
FORBID THAT I SHOULD FORBID THAT I SHOULD VENTURE ON ANY BUSINESS VENTURE ON ANY BUSINESS WITHOUT FIRST BEGGING THY WITHOUT FIRST BEGGING THY DIRECTION AND ASSISTANCE.DIRECTION AND ASSISTANCE.
Susan WesleySusan Wesley
Session 9: Components of a Farm Business PlanSession 9: Components of a Farm Business Plan
Components of Farm Business PlanComponents of Farm Business Plan
Enterprise
Farmland Size (ha /sq.m.
Expected Yield/ha or unit
Total Yield (ton/kg/bag)
Enterprise Farmland Size (ha sq.m.
Expected Yield/ha or unit
Total Yield (ton/kg/bag)
Example 1: Production Plan
3. Market Plan - It specifies the enterprise, the target 3. Market Plan - It specifies the enterprise, the target market and buyer in addition to the questions below.market and buyer in addition to the questions below.
Component 3 : The Element of Market PlanComponent 3 : The Element of Market Plan
Enterprise
Target Market
Buyer Expected volume to sell
Farm gate price
Delivered Market Price
Marketing Cost
3. Market Plan
Visit potential market Find out about different forms of transport Look at different forms of packaging Link out with specific buyers
4. Financial Plan
Cash Flow
- List the sales and expenditure items when they occur in a year - Prepares a cash flow table - Calculate the net cash flow
Cash Flow is used: - to monitor liquidity - for farm planning and management - to provide solutions to cash short falls
Three Questions to be answered as inputs to financial Three Questions to be answered as inputs to financial plan.plan.
ITEMITEM QUANTITYQUANTITY UNIT PRICE/kgUNIT PRICE/kg VALUE (PhP)VALUE (PhP)
CornCorn 1,600 kg1,600 kg P23.00P23.00 36,800.0036,800.00
Variable CostsVariable Costs
SeedSeed 50 kg.50 kg. 50.0050.00 2,500.002,500.00
Fertilizer Fertilizer 1 bag1 bag 700700 700.00700.00
Fertilizer (2)Fertilizer (2) 1 bag1 bag 3,5003,500 3,500.003,500.00
Irrigation feesIrrigation fees 10 hrs.10 hrs. 400.00400.00 4,000.004,000.00
Labor chargesLabor charges 8 hrs.8 hrs. 400.00400.00 3,200.003,200.00
HarvestingHarvesting 8 hrs.8 hrs. 250.00250.00 2,000.002,000.00
TVCTVC 15,900.0015,900.00
Enterprise ProfitEnterprise Profit 20,900.0020,900.00
ITEM Purchase Price/Unit
Date of Purchase
Life Span
Dep’n Cost
Total Cost for the enterprise
Fixed CostFixed Cost
4.14.1 Cash FlowCash Flow
It details the cash flow (in/out) for each enterprise, It details the cash flow (in/out) for each enterprise, each each month to ensure that enough cash is available to the month to ensure that enough cash is available to the business.business.
Liquidity is the ability of the farmers to generate Liquidity is the ability of the farmers to generate enough cash to meet financial obligations as enough cash to meet financial obligations as they come due without disrupting the normal they come due without disrupting the normal operation of the farm.operation of the farm.
Activity Sep
Oct Nov Dec Jan Feb
Mar
Apr
May Jun Jul Aug
Total
Inflow
Sales 5,900 5,900
Cash Available
5,900
Outflow
Seed 500
Fertilizer
500
Pesticide
200
Hired labor
900 900 540 900 3240
Cash Needed
900 1900 200 540 900 4440
Net Cash Flow
(900) (2800)
(3000)
(3540)
(4440)
1460 1460
Cash Flow
4.2. Profitability4.2. Profitability
It details the profit contribution from each It details the profit contribution from each enterprise, and deduct fixed costs to arrive at enterprise, and deduct fixed costs to arrive at whole farm net profitwhole farm net profit..
5. Risk Management5. Risk Management
Risk is defined as the probable occurrence of an event, which can be Risk is defined as the probable occurrence of an event, which can be calculated with some accuracy. It can be determined by identifying all calculated with some accuracy. It can be determined by identifying all the possible outcomes of a given situation. However, it is impossible to the possible outcomes of a given situation. However, it is impossible to predict what we really happen. This unknown factor is risk. predict what we really happen. This unknown factor is risk.
Risk factors in farming:Risk factors in farming:
1.1.Agriculture depends on biological processes and is subject to Agriculture depends on biological processes and is subject to fluctuations in production as a result of weather change and disease.fluctuations in production as a result of weather change and disease.2.2.Enterprises, such as vegetables are subject to sudden changes in Enterprises, such as vegetables are subject to sudden changes in price.price.3.3.Long term enterprises, such as tree crops require investment for a Long term enterprises, such as tree crops require investment for a long period and may be subject to price changes that make them long period and may be subject to price changes that make them uneconomic.uneconomic.4.4.Certain crops may thrive under conditions prevalent in some parts Certain crops may thrive under conditions prevalent in some parts of the country but prove uneconomic in others.of the country but prove uneconomic in others.
The most common sources of risks are:The most common sources of risks are:
production and technical riskproduction and technical risk
marketing or price riskmarketing or price risk
financial riskfinancial risk
institutional risk institutional risk
human or personal riskhuman or personal risk
The common risk management strategies The common risk management strategies
Farm Business Plan OutlineFarm Business Plan Outline
Enterprise: __________ Date: _______
1.Background of your enterprise: _______________________2.Name of Farmer Entrepreneur: _________________________3.Address: _____________________4.Period of the Plan: _______________________
VISION:
GOAL:
1.Farm Production Plan2.Market Plan3.Financial Plan4.Management Plan (i.e. risks, how to smoothly apply all the learned lessons of this seminar need kin management, all stated activities in the action shall be done according to calendar of operations)
Risks Mitigate Risks
RISK MANAGEMENTRISK MANAGEMENT
ACTION PLANACTION PLAN
1.1. Physical resources and inputsPhysical resources and inputs
Arrange financing for buying inputsArrange financing for buying inputs Confirm suppliers and the costs of each input itemConfirm suppliers and the costs of each input item
Arrange transport to collect/deliver input ahead of time for its Arrange transport to collect/deliver input ahead of time for its useuse Place orders/collect inputs from suppliersPlace orders/collect inputs from suppliers
2. Labor2. Labor
Identify skilled labor from nearby areasIdentify skilled labor from nearby areas Check other farmers source of laborCheck other farmers source of labor Identify technologies that could bring down the cost of laborIdentify technologies that could bring down the cost of labor Train labor so that they could work more efficientlyTrain labor so that they could work more efficiently
ACTION PLANACTION PLAN
ACTION DURATION
START DATE
RESPONSIBILITY
Physical Resources
Production /labour
Market
Risks
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