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