Farm Business Plan
If you want to start a successful farm or expand your current farming business, you need a business plan.
Fortunately, you’re in the right place. Our team has helped develop over 100,000 business plans over the past 20 years, including thousands of farm business plans.
The following farm business plan template and example gives you the key elements you must include in your plan. In our experience speaking with lenders and investors, the template is organized in the precise format they want.
Example Business Plan For Farm Businesses
I. Executive Summary
Business Overview
[Company Name], located at [insert location here] is a new, 500 acre organic dairy, beef, and wheat farm providing food products to regional distributors. [Company Name] is headed by [Founder’s Name], an experienced farm manager.
Products
[Company Name]will sell high-quality beef cuts, wheat by the bushel, and whole milk. The products will be certified organic as growth hormones, fertilizers and pesticides will not be used in production.
Customer Focus
[Company Name] will primarily serve regional distributors of dairy, beef, and wheat products. Some products may be sold directly to manufacturers in the local area for the production of other products from these ingredients.
These businesses typically gross $5 million to $50 million in annual revenues and source their supplies from farms within a 100 mile radius of their facilities.
Distributors and manufacturers of food products in the region see growth in interest in organic products and are in need of organic ingredients for suppliers. Consumers show increased demand for these organic products at stores.
Management Team
[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a farm operations manager for the past 15 years. He has spent much of his career working with Blue Ridge Farms, where he oversaw dairy, meat, and grain production.
[Company name] will also employ an experienced salesmanager to sell to distributors and manufacturers. This will be a skilled salesperson trained in farm sales by [Founder’s Name]. An assistant manager will manage day-to-day operations of the farm.
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- [Company Name] will fill a specific market niche in organic foods. In addition, we have surveyed the regional distributors and received extremely positive feedback saying that they explicitly want to buy our products when launched.
- Our location is within 100 miles of numerous potential distributors and contains hundreds of acres of arable land.
- The management team has a track record of success in the farming business.
Financial Highlights
[Company Name] is seeking a total funding of $683,200 of debt capital to open its farm. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.
Specifically, these funds will be used as follows:
| Financial Summary | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Revenue | $298,947 | $332,212 | $368,689 | $405,491 | $445,762 |
| Total Expenses | $282,316 | $274,810 | $295,944 | $308,335 | $320,390 |
| EBITDA | $16,631 | $57,402 | $72,745 | $97,156 | $125,372 |
| Depreciation | $41,000 | $41,000 | $41,000 | $41,000 | $41,000 |
| EBIT | ($24,369) | $16,402 | $31,745 | $56,156 | $84,372 |
| Interest | $27,328 | $23,912 | $20,496 | $17,080 | $13,664 |
| PreTax Income | ($51,697) | ($7,510) | $11,249 | $39,076 | $70,708 |
| Income Tax Expense | $0 | $0 | $0 | $0 | $21,639 |
| Net Income | ($51,697) | ($7,510) | $11,249 | $39,076 | $49,069 |
| Net Profit Margin | - | - | 3% | 10% | 11% |
II. Company Overview
Who is [Company Name]?
[Company Name], located at [insert location here] is a new 500 acredairy, beef, and wheat farm providing food products to regional distributors. [Company Name] is headed by [Founder’s Name], an experienced farm manager. 300 acres of its land will be devoted to growing wheat and the remainder will be for dairy, beef, and office facilities.
While [Founder’s Name] has been in the farming business for some time, it was in [month, year] that he decided to launch [Company Name]. Specifically, during this time, [Founder] met with a former friend and fellow independent organic farm owner in South Dakota who has had tremendous success. After discussing the business at length, [Founder’s Name] clearly understood that a similar farm would enjoy significant success in his hometown.
Specifically, the customer demographics and competitive situations in the South Dakota area of his friend and in his hometown were so similar that he knew the business would work. After surveying the local market, [Founder’s name] went ahead and founded [Company Name].
[Company Name]’s History
Upon returning from South Dakota, surveying the local customer base, and finding potential land to start the farm, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
The business is currently being run out of [Founder’s Name] home office, but once the land is purchased and [Company Name]’s facilities are finalized, all operations will be run from there.
Since incorporation, the Company has achieved the following milestones:
- Found land and negotiated rate
- Developed the company’s name, logo and website located at [website]
- Determined building, equipment and fixture requirements
- Begun recruiting key employees
[Company Name]’s Products
[Founder’s Name] will be able to provide customers with the following products:
- High-quality organic beef cuts
- Organically-grown wheat by the bushel
- Organic whole milk
III. Industry Analysis
The American commercial farming industry continues to be subsidized by the government to bolster low food prices. This is a volatile and difficult industry in the United States, with small and medium-sized farms increasingly being bought by large farms or struggling to survive on their own.
However, for organic foods, trends are positive. Organic foods sales are projected to increase 18% per year over the next three years and were estimated at $23 billion last year, according to the Organic Trade Association Market Survey. This sector is said to represent 3% of overall food and beverage sales. Global demand for organic foods increases by over $5 billion per year.
The farming industry includes multiple segments including poultry meat, beef, dairy, grain crops, vegetables, fruits, and more. Many businesses focus on only one specific segment, while some produce multiple types of crops in order to hedge against price changes in any one segment.
Recently, Horizon, the largest US organic food brand, dropped the term “organic” from its dairy products choosing instead to use the term “natural”. Critics noted that the term “natural” has no regulatory meaning and shows Horizon’s attempt to lower the cost of production by not meeting the requirements for the organic label. This shows a concern in the market about the meaning behind labels and highlights the importance of regulation to create common definitions.
Organic.org published the following list of reasons to support organic foods and beverages:
- Reduce the toxic load: Keep chemicals out of the air, water, soil and our bodies
- Reduce if not eliminate farm pollution
- Protect future generations
- Build healthy soil
- Taste better and truer flavor
- Assist family farmers of all sizes
- Avoid hasty and poor science in your food
- Eating with a sense of place
- Promote biodiversity
- Celebrate the culture of agriculture
Trends in the industry include the following:
- Meat and fish that are organically produced are becoming more popular
- Organic dairy, bread, and grain are becoming more popular
- Organic-only supermarkets are becoming more popular
- Traditional supermarkets are increasing organic purchases to keep up with these competitors.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name]will primarily serve regional distributors of dairy, beef, and wheat products. Some products may be sold directly to manufacturers in the local area for the production of other products from these ingredients.
These businesses typically gross from $5 million to $50 million in annual revenues and source their supplies from within a 100 mile radius of their facilities.
Distributors and manufacturers of food products in the region see growth in interest in organic products and are in need of organic ingredients for suppliers. Consumers show increased demand for these organic products at stores.
Customer Segmentation
The Company will primarily target the following two customer segments:
- Regional Organic Distributors: Organic food distributors source organic meat, dairy, and grains from medium and large farms, and sell them to food manufacturers who process, package and sell the products.
- Organic Dairy Manufacturers: Small manufacturers that process organic dairy products, such as butter, cream, and cheese work directly with local farms to keep costs low whenever possible.
V.Competitive Analysis
Direct & Indirect Competitors
The following twoorganic farms operate within a 100 mileradius of [Company Name]. These, and other smaller organic farms like them, are the direct competitors of the business. Indirect competitors include non-organic dairy, beef, and grain farms.
Nature’s Bounty Farm
Nature’s Bounty Farm is a five-year old farm which produces vegetables and grains for organic distributors. They operate a 1000 acre farm, producing a high volume of goods.
However, Nature’s Bounty Farm does not offer organic dairy and meat, which are up-and-coming products.
Thompson Organics
Thompson Organics is a small, 300 acre, ten-year old farm which produces organic grains and bakes organic breads. They sell all of their products at farmer’s markets and directly at retail stores. This distribution strategy requires Thompson to have skilled customer service and sales employees, as well as facilities for baking and packaging.
Because Thompson avoids selling through to distributors, its brand is known directly by consumers who look for organic foods and it can command a premium. However, they, like Nature’s Bounty Farm, do not offer organic dairy and meat. They also have a high cost structure because of their small scale and operations.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Client-oriented service: [Company Name] will have a full-time sales manager to keep in contact with customers and answer their everyday questions. [Founder’s Name] realizes the importance of accessibility to customers and will instruct the sales manager to proactively solicit feedback from customers.
- Management: [Founder’s Name] has been extremely successful working in the farming business and will be able to use his previous experience to assure clients of the care that [Company Name] will take to create the best organic products. His unique qualifications will serve customers in a much more sophisticated manner than [Company Name’s] competitors.
- Transparency:To continue to assure customers and the government of the organic quality of [Company Name]’s products, operations can be inspected by customers at a moments notice, and a guide to the operations will be created to detail all of the steps in the production process for each crop.
- Product Line: By offering wheat, dairy, and meat, [Company Name] will seek to hedge against price volatility in any one of these commodities.
VI. Marketing Plan
[Company Name] will use several strategies to promote its name and develop its brand. By using an integrated marketing strategy, [Company Name] will win customers and develop consistent revenue streams.
The [Company Name] Brand
The [Company name] brand will focus on the Company’s unique value proposition:
- High-quality, organic milk, beef, and grains
- Service built on long-term relationships
- Transparency of operations to achieve customer assurance of organic quality
Promotions Strategy
Targeted Cold Calls
[Company Name] will initially invest significant time and energy into contacting potential customers via telephone and then by visiting their facilities. In order to improve the effectiveness of this phase of the marketing strategy, a highly-focused call list will be used; targeting distributors and manufacturers with an expressed interest in organic products. As this is a very time-consuming process, it will primarily be used during the startup phase to build an initial customer base.
Industry Events
By attending regional farming conferences, association meetings, and symposia, [Company Name] will network with industry leaders, and seek referrals to potential customers. [Founder’s Name] will often attend with the company sales manager, but both may attend separately in the future as they gain experience in this networking.
Internet
[Company Name] will invest resources in two forms of geographically-focused internet promotion—organic search engine optimization and pay-per-click advertising. The Company will develop its website in such a manner as to direct as much traffic from search engines as possible. Additionally, it will use highly-focused, specific keywords to draw traffic to its website, where potential clients will find a content-rich site that presents [Company Name] as the trustworthy, high quality producer of organic foods that it is.
Pricing Strategy
[Company Name]’s pricing will be competitive compared with Nature’s Bounty Farm. Pricing will be about 50% lower than retail prices to allow for wholesalers and retailers to earn their margins.
VII. Operations
[Company Name] will carry out its sales operations through phone calls and visits to customer offices. The sales manager will increasingly direct sales activities, although [Founder’s Name] will be heavily involved at first.
The assistant manager will run the day-to-day operations of the farm, including scheduling and assigning the work of farm hands, sourcing and purchasing supplies and basic equipment, keeping the company’s books, maintaining legal licenses, handling insurance and insuring that the company meets government regulations. He will contact specialists for equipment repairs when needed and veterinarians to care for the cows when they require medical attention.
Field work by the farm hands will be from sunrise to sunset, with indoor work during the hottest parts of the day and after dark. Field work will include preparing fields for planting, the planting process, tending to planted fields, harvesting, and packaging grain into bushels. Work with the cows will include feeding, taking them in and out of the pasture, and running the milking equipment. It will also include slaughtering and dressing the cows for beef when directed.
Milestones
[Company Name]’s long term goal is to become the highest quality farmer in the [city] area. We seek to do this by ensuring customer satisfaction and developing a loyal and successful clientele.
The following are a series of steps that will lead to this long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Close on purchase of land |
| [Date 2] | Design and build out [Company Name] farm buildings |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign with targeted cold calls |
| [Date 5] | Produce first harvest |
| [Date 6] | Reach break-even |
VIII. Management Team
[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a farm operations manager for the past 15 years. He has spent much of his career working with Blue Ridge Farms, where he oversaw dairy, meat, and grain production.
[First name] is intimately familiar with the operations requirements for a farm producing the same products as [Company Name]. He has received organic training certification to become an organic food producer.
[Company name] will also employ an assistant manager to manage operations. This will be an experienced operations manager who will be trained in farm operations by [Founder’s Name]. Furthermore, a sales manager will be hired to focus on marketing, sales, and customer service to distributors as manufacturers for [Company Name] products. These two individualswill either have undergraduate business degrees or years of relevant operations or sales experience.
Hiring Plan
In order to launch the business we will also hire the following additional employee:
- Farm Hand: (1 full-time to start) Additional farm hands will be hired if capacity increases or if another farm is started.
The hiring process will be managed by the assistant manager who will be directly responsible for the farm hand, with oversight and approval by [Founder’s Name]. This individual must be in top physical condition, have experience in physical labor, and have great mechanical facility and care for the quality of his work and products.
The assistant manager and [Founder’s Name] will provide back-up support for the farm hand in the busiest times and when he is out sick or on vacation.
IX. Financial Plan
Revenue & Pricing
[Company Name]’s revenues will come primarily fromsale in three product areas.
These are:
| Revenue Stream | Current Price | % of Revenue |
|---|---|---|
| Milk | $2 / gallon | 68% |
| Beef | $1 / pound | 8% |
| Grain | $6 / bushel | 24% |
The price of beef is only an average per cow, and individual cuts are sold at market rates depending on the quality of the cut of meat.
Prices are expected to fluctuate with market volatility on the rise, although they are expected to rise consistently, on average.
Key Cost Drivers
As with most services, labor expenses are the key cost drivers. The staff of four will earn competitive salaries allowing [Company Name] to hireexperienced workers. Furthermore, the costs of the mortgage and its interest for the land will be significant.
The major cost drivers for the company’s operation will consist of:
- Salaries
- Mortgage
- Marketing expenses (associations, events, internet marketing).
Capital Requirements and Use of Funds
[Company Name] is seeking a total funding of $683,200 of debt capital to open its farm. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Build-out of farm and equipment purchases: $273,200
- Initial marketing expenditure: $10,000
- Property down payment: $100,000
- Working capital: $300,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions & Forecasts
The following table reflects the key revenue and cost assumptions made in the financial model.
| Acreage for Crops | 300 |
|---|---|
| Number of customers per month | |
| FY1 | 50 |
| FY2 | 75 |
| FY3 | 100 |
| FY4 | 125 |
| FY5 | 150 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
