Farm Management

Many farm producers prepare a business plan each year, often for the purpose of renewing their credit requirements, or in support of a new loan application.Unfortunately, this task is too often viewed as something that must be done for the credit manager in order to get a loan. And, while this is often the case, producers need to realize that they can also greatly benefit from a well-prepared business plan.


Preparing a business plan is probably one of the more important tasks that managers do in the course of over seeing a business. Time spent preparing a well thought-out plan can have a significant payback in both financial rewards and peace of mind. The purpose of this article is to provide farm managers and other users of financial statements, a better understanding of how to prepare, analyze and interpret financial statements in a business plan.

This may seem like a complicated task. However, the purpose of this article is to take someof the mystery out of this task, and hopefully provide users with the necessary tools to more effectively analyze financial statements and make informed business decisions. Farmplan has been developed and released by Manitoba Agriculture and Food in order to assist farm producers in preparing a business plan.

Much of this discussion will build on the information provided by this new planning program. The accrual adjustments include change to inventory and supplies, accounts payable and accounts receivable, and outstanding interest from the beginning to the end of the period.The Net Farm Income provides the answer to the question of how much profit the farm has made or is projected to make, in the business plan.