organic farming business plan

New Crops & Organics

Organic Farm Business Planning

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A successful business always includes a good business plan. A new agricultural enterprise needs to produce profits to be worthwhile for the farmer. In order to assess if a new crop or product, like organics, will work for your business you’ll need to “run your numbers” and flush out the details by preparing a sound plan. The process of developing a business plan allows entrepreneurs to spot risks and pitfalls in a new idea and determine the profitability of that idea. In addition, lenders and funders may require a business plan prior to financing your operation.

An agricultural enterprise budget acts as a financial decision-making matrix wherein the farmer inputs all costs and returns to determine the profitability of a crop or livestock enterprise. Although enterprise budgets are only estimates, they provide an idea of what a farmer can expect to make when producing and selling a new crop.

Business Planning Resources

• Building a Business Plan for your Farm: Important First Steps
• Asheville SCORE – free professional counseling for small businesses and enterprises

Budgets, Pricing & Profitability

(not all organic, but good information for all farmers)

• Vegetable Crop Budgets – NC State University Agricultural & Resource Economics
• Fruit Budgets – NC State University Agricultural & Resource Economics
• The New Farm OPX – Organic Price Index
• Grants Available through Southern SARE
• Western North Carolina AgOptions
• RAFI-USA – For former and current tobacco growers
• Self-Help Credit Union – creating ownership and economic opportunity to those who are underserved by conventional lenders
• Carolina Farm Credit

Reviewed 7/4/2022. Jeanine Davis, NC Alternative Crops & Organics Program, Department of Horticultural Science, NC State University.

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How to Start a Farm: Plan Your Operation

Think about your operation from the ground up and start planning for your business.  A good farm business plan is your roadmap to start-up, profitability, and growth, and provides the foundation for your conversation with USDA about how our programs can complement your operation. 

Keep reading about planning your business below, get an overview of the beginning farmer's journey , or jump to a different section of the farmer's journey.

On This Page

Why you need a farm business plan.

A comprehensive business plan is an important first step for any size business, no matter how simple or complex. You should create a strong business plan because it:

• Will help you get organized . It will help you to remember all of the details and make sure you are taking all of the necessary steps.
• Will act as your guide . It will help you to think carefully about why you want to farm or ranch and what you want to achieve in the future. Over time, you can look back at your business plan and determine whether you are achieving your goals.
• Is required to get a loan . In order to get an FSA loan, a guarantee on a loan made by a commercial lender, or a land contract, you need to create a detailed business plan . Lenders look closely at business plans to determine if you can afford to repay the loan.

How USDA Can Help

Whether you need a good get-started guide, have a plan that you would like to verify, or have a plan you’re looking to update for your next growth phase, USDA can help connect you to resources to help your decisions.

Your state's beginning farmer and rancher coordinator  can connect you to local resources in your community to help you establish a successful business plan. Reach out to your state's coordinator for one-on-one technical assistance and guidance. They can also connect you with organizations that specifically serve beginning farmers and ranchers.

It is important to know that no single solution fits everyone, and you should research, seek guidance, and make the best decision for your operation according to your own individual priorities.

Build a Farm Business Plan

There are many different styles of business plans. Some are written documents; others may be a set of worksheets that you complete. No matter what format you choose, several key aspects of your operation are important to consider.

Use the guidelines below to draft your business plan. Answering these kinds of questions in detail will help you create and develop your final business plan. Once you have a business plan for your operation, prepare for your visit to a USDA service center. During your visit, we can help you with the necessary steps to register your business and get access to key USDA programs.

Business History

Are you starting a new farm or ranch, or are you already in business? If you are already in business:

• What products do you produce?
• What is the size of your operation?
• What agricultural production and financial management training or experience do you, your family members, or your business partners have?
• How long have you been in business?

Mission, Vision, and Goals

This is your business. Defining your mission, vision and goals is crucial to the success of your business. These questions will help provide a basis for developing other aspects of your business plan.

• What values are important to you and the operation as a whole?
• What short- and long-term goals do you have for your operation?
• How do you plan to start, expand, or change your operation?
• What plans do you have to make your operation efficient or more profitable ?
• What type of farm or ranch model (conventional, sustainable, organic, or alternative agricultural practices) do you plan to use?

Organization and Management

Starting your own business is no small feat. You will need to determine how your business will be structured and organized, and who will manage (or help manage) your business. You will need to be able to convey this to others who are involved as well.

• What is the legal structure of your business? Will it be a sole proprietorship, partnership, corporation, trust, limited liability company, or other type of entity?
• What help will you need in operating and managing your farm or ranch?
• What other resources, such as a mentor or community-based organization , do you plan to use?

Marketing is a valuable tool for businesses. It can help your businesses increase brand awareness, engagement and sales. It is important to narrow down your target audience and think about what you are providing that others cannot.

• What are you going to produce ?
• Who is your target consumer ?
• Is there demand for what you are planning to produce?
• What is the cost of production?
• How much will you sell it for and when do you expect to see profit ?
• How will you get your product to consumers ? What are the transportation costs and requirements?
• How will you market your products?
• Do you know the relevant federal, state, and local food safety regulations? What licensing do you need for your operation?

Today there are many types of land, tools, and resources to choose from. You will need to think about what you currently have and what you will need to obtain to achieve your goals.

• What resources do you have or will you need for your business?
• Do you already have access to farmland ? If not, do you plan to lease, rent, or purchase land?
• What equipment do you need?
• Is the equipment and real estate that you own or rent adequate to conduct your operation? If not, how do you plan to address those needs?
• Will you be implementing any conservation practices to sustain your operation?
• What types of workers will you need to operate the farm?
• What additional resources do you need?

Now that you have an idea of what you are going to provide and what you will need to run your operation you will need to consider the finances of your operation.

• How will you finance the business?
• What are your current assets (property or investments you own) and liabilities (debts, loans, or payments you owe)?
• Will the income you generate be sufficient to pay your operating expenses, living expenses, and loan payments?
• What other sources of income are available to supplement your business income?
• What business expenses will you incur?
• What family living expenses do you pay?
• What are some potential risks or challenges you foresee for your operation? How will you manage those risks?
• How will you measure the success of your business?

Farm Business Plan Worksheets

The Farm Business Plan Balance Sheet can help gather information for the financial and operational aspects of your plan.

Form FSA-2037 is a template that gathers information on your assets and liabilities like farm equipment, vehicles and existing loans.

• FSA-2037 - Farm Business Plan - Balance Sheet
• FSA-2037 Instructions

Planning for Conservation and Risk Management

Another key tool is a conservation plan, which determines how you want to improve the health of your land. A conservation plan can help you lay out your plan to address resource needs, costs and schedules.

USDA’s Natural Resources Conservation Service (NRCS) staff are available at your local USDA Service Center to help you develop a conservation plan for your land based on your goals. NRCS staff can also help you explore conservation programs and initiatives, such as the Environmental Quality Incentives Program (EQIP) .

Conservation in Agriculture

Crop insurance, whole farm revenue protection and other resources can help you prepare for unforeseen challenges like natural disasters.

Disaster Recovery

Special Considerations

Special considerations for businesses.

There are different types of farm businesses each with their own unique considerations. Determine what applies to your operation.

• Organic Farming  has unique considerations. Learn about organic agriculture , organic certification , and the  Organic Certification Cost Share Program  to see if an organic business is an option for you. NRCS also has resources for organic producers and offers assistance to develop a conservation plan.
• Urban Farming  has special opportunities and restrictions. Learn how USDA can help farmers in urban spaces .
• Value-Added Products . The Agricultural Marketing Resource Center (AgMRC) is a national virtual resource center for value-added agricultural groups.
• Cooperative.  If you are interested in starting a cooperative, USDA’s Rural Development Agency (RD) has helpful resources to help you begin . State-based  Cooperative Development Centers , partially funded by RD, provide technical assistance and education on starting a cooperative.

Special Considerations for Individuals

Historically Underserved Farmers and Ranchers: We offer help for the unique concerns of producers who meet the USDA definition of "historically underserved,"  which includes farmers who are:

• socially disadvantaged
• limited resource
• military veterans

Women: Learn about specific incentives, priorities, and set asides for  women in agriculture within USDA programs.

Heirs' Property Landowners: If you inherited land without a clear title or documented legal ownership, learn how USDA can help Heirs’ Property Landowners gain access to a variety of programs and services

Business Planning

Creating a good business plan takes time and effort. The following are some key resources for planning your business.

• Farm Answers from the University of Minnesota features a library of how-to resources and guidance, a directory of beginning farmer training programs, and other sources of information in agriculture. The library includes business planning guides such as a Guide to Developing a Business Plan for Farms and Rural Businesses and an Example Business Plan .
• The Small Business Administration (SBA) offers information about starting, managing, and transitioning a business.

SCORE is a nonprofit organization with a network of volunteers who have experience in running and managing businesses. The Score Mentorship Program partners with USDA to provide:

• Free, local support and resources, including business planning help, financial guidance, growth strategies.
• Mentorship through one-on-one business coaching -- in-person, online, and by phone.
• Training from subject matter experts with agribusiness experience.
• Online resources and step-by-step outlines for business strategies.
• Learn more about the program through the Score FAQ .

Training Opportunities

Attend field days, workshops, courses, or formal education programs to build necessary skills to ensure you can successfully produce your selected farm products and/or services. Many local and regional agricultural organizations, including USDA and Cooperative Extension, offer training to beginning farmers.

• Cooperative Extension  offices address common issues faced by agricultural producers, and conduct workshops and educational events for the agricultural community.
• extension.org  is an online community for the Cooperative Extension program where you can find publications and ask experts for advice.

Now that you have a basic plan for your farm operation, prepare for your visit to a USDA service center.

2. Visit Your USDA Service Center

How to Start a Farm with USDA

Get an  overview of the beginning farmer's journey  or jump to a specific page below.

Find Your Local Service Center

USDA Service Centers are locations where you can connect with Farm Service Agency, Natural Resources Conservation Service, or Rural Development employees for your business needs. Enter your state and county below to find your local service center and agency offices. If this locator does not work in your browser, please visit offices.usda.gov.

Learn more about our Urban Service Centers . Visit the Risk Management Agency website to find a regional or compliance office  or to find an insurance agent near you.

• Business Ideas
• Registered Agents

How to Start an Organic Farm in 14 Steps (In-Depth Guide)

Updated:   March 29, 2024

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The organic food market has exploded in recent years, with growth estimated at 8.04% from 2017 to 2027. As health and sustainability concerns drive consumer demand, the organic farming industry is primed for even more growth.

Entrepreneurs hoping to tap into the sustainable agriculture market may wonder how difficult it is to start an organic farm. The barriers to entry are lower than you might expect thanks to innovative new technologies. With some grit, business savvy, and attention to organic certification, your small plot could blossom into a thriving organic farm.

This guide will walk you through how to start an organic tea. Topics include market research, competitive analysis, marketing, customer focus, sourcing equipment, accounting processes, and more.

1. Conduct Organic Farm Market Research

Market research is essential to starting your own certified organic farm and developing a solid business plan. It offers insight into your target market, organic farming practices, and trends in the small organic farm market. It also tells you how other local farmers are pricing produce and where to acquire suitable land.

Some details you’ll learn through research on sustainable farming practices include:

• While the overall farming industry is declining in terms of the number of farms, the number of organic farms continues to rise year over year.
• Diversified demand presents opportunities across crop types for new organic producers. Orchards , flower farms, pumpkin patches , and lavender farms are all becoming more common in the organic farm industry as time goes by.
• Location also plays an important role – organic farms across every U.S. region saw rising sales in 2021, led by the Mountain Plains and Midwest.
• Beyond direct-to-consumer sales at farmers’ markets and farm stands, organic wholesalers are reporting increased demand from grocers, restaurants, and food manufacturers.
• Organic ingredients helped food brands like Beyond Meat increase revenues by 35.6% last year as plant-based alternatives take off.
• Evaluating these B2B routes could significantly expand your addressable customer segments.
• Switching from conventional to organic production takes years of preparation to stop using synthetic chemicals and build healthy soil that meets NOP standards.
• Pricing pressure from rising competition also requires tight control of operations and costs.
• Startup organic farmers may consider targeting niche, high-value crops, and marketing directly to local customers.

The market opportunity for new organic producers is substantial. Success lies in identifying regional demand gaps across specific crops, creatively accessing wholesale distribution channels, mastering unique organic techniques, and above all, delivering a high-quality product that consumers are increasingly seeking.

2. Analyze the Competition

Entering the organic farming industry prepared means carefully evaluating your competition. From large wholesale producers to small CSAs. This analysis should assess both local farm competitors as well as benchmark against wider industry metrics.

Locally, identify direct competitors selling at farmers’ markets and operating CSAs in your geographic target area. Visit their farm stands and sign up for newsletters to gather intel on product offerings, production volumes, branding strategies, and pricing models.

For wholesale producers in your region, research available data on acreage, employees, crops, and certifications through state agriculture departments. Identifying potential partner farms for distribution deals can also help gauge regional competition.

Analysis should also cover the digital presence and marketing savvy of key local players. Review their websites, social media, and online advertising footprint – are they easy to find and engage with online? How effectively are they telling their unique farm story? This can spotlight digital opportunities to differentiate.

Benchmarking financial and operational metrics will indicate how competitive the landscape truly is. Industry average net profit margins for organic crop production range from 15-25% depending on scale, while the average cost of goods sold hovers around 65 cents per dollar of revenue.

Labor, certification, distribution, and marketing expenses also vary widely based on crops, volumes, and sales channels. Checking your business plan against these industry benchmarks helps set realistic goals.

This 360-degree view of regional and national competitors, including their customer reach, brand positioning, and economics, allows you to carve out your niche. It also sets a baseline for defining what competitive advantages you can create through superior product quality, customer service, storytelling, or technology integration.

3. Costs to Start an Organic Farm Business

Starting an organic farm requires significant upfront investment – often between $50,000 to $500,000 depending on size and model. Organic farms are also highly varied, ranging from organic orchards to pearl farms which makes finding an accurate estimate very difficult.

Start-up Costs

• The average cost of farmland in the U.S. is currently around $3,140 per acre according to the USDA, but prices vary widely by region.
• Leasing land via long-term agreements is often a cheaper option for new farmers, with average rental rates around $138 per acre.
• A small 5-10 acre starter organic veggie farm may require $15,000-$30,000 at purchase or $690-$1,380 per year rented. These costs are higher if you plan on growing more exotic organic produce, such as bamboo farming .
• The essential equipment needed, including a greenhouse ($5,000-$20,000)
• Irrigation system ($3,000-$15,000 depending on acreage)
• Tractor ($10,000 for used)
• Various farm tools can easily total over $30,000.

Ongoing Costs

• Labor costs typically make up around 35% of an organic farm’s operating expenses.
• Payroll for a small, moderately mechanized 5-10 acre farm may cost $15,000-$30,000 per year.
• Getting certified organic by a USDA-accredited agency involves fees of $500 to $4,000 paid upfront and annually.
• The organic certification process also requires implementing approved methods on your land for 3+ years in advance, representing a major upfront time and cost barrier.
• A minimum of 12 months of working capital is recommended at the start – perhaps $20,000 for a small starter farm.
• Starting an organic dairy operation often requires closer to $500,000 in working capital to sustain the longer ramp-up.
• Seeds, organic soil amendments, insect/weed control, etc. to sustain production may cost around $2,000 per acre.
• Aggregating, packing, and shipping crops to markets can cost 35% or more of revenue.
• Product liability and crop insurance to protect against weather/disease losses cost on average $380-$1000+ per year.
• Farm website, digital/print advertising, and branded packaging are often a minimum 5% of revenue

Careful financial planning and risk management are vital with the substantial cost outlays to profitably launch and sustain an organic farm.

4. Form a Legal Business Entity

When starting an organic farm, incorporating it as a formal business entity offers important protections and credibility, especially as you grow. Weighing the pros and cons of each structure will lead to the best choice for your operations.

Sole Proprietorship

Simplest and most common for small, early-stage farms. You gain complete control and avoid corporate taxes. However, you are personally liable for all debts and legal actions against the business – substantial risk exposure for a farm with heavy equipment, chemical inputs, and physical labor. Difficult to raise investment capital or take on partners for scaling.

Partnership

Allows multiple owners to share control and liability risks. Brings specialized skills together under one entity. However, any partner can be held responsible if another makes poor decisions or leaves. The partnership may dissolve if a partner departs. Less flexibility for changing ownership stakes over time.

Limited Liability Corporation (LLC)

The best of both worlds for shielding personal assets and allowing shared ownership. Profits pass directly to members’ tax returns, avoiding double taxation. Members cannot be held personally liable for LLC debts and lawsuits. Easy to modify ownership percentages, add new investors, and are even create new classes of membership interests over time.

Corporation

Most complex and expensive to establish ($1500+ incorporation fees) but offers the strongest personal liability protection for shareholders. Attractive to outside investors due to the ability to issue stock. However, profits are taxed both at the corporate rate and shareholder level – less efficient for smaller businesses with few owners. Significant legal/accounting oversight is required.

5. Register Your Business For Taxes

Forming a recognized business entity for your organic farm is an important first step, but you also need to register for the required tax IDs to legally operate. At a minimum, obtaining an Employer Identification Number (EIN) from the IRS establishes your legitimacy to pay employees and file taxes.

An EIN acts as a Social Security Number for your business. The IRS uses it to track tax obligations from business income, employees, etc under your farm’s entity. Applying online for an EIN is free and takes less than 30 minutes through the IRS website.

To complete the form, you’ll need identifying details like your name, address, Social Security Number, and business structure. No documentation is required upfront – simply submit the secure form. You will receive your EIN immediately upon approval.

With your EIN, you can open business bank accounts, apply for licenses and permits, and hire employees and contractors while being compliant with payroll tax obligations. It also allows you to file important tax returns and registration forms under your business name rather than your identity.

If selling products direct-to-consumer in your state, check specific requirements for collecting/remitting sales tax. For example, Wisconsin requires farm operations with over $4,000 in annual income to register for a state tax ID through the Department of Revenue before selling anything. Fees are under $100 and involve listing your chosen business name/entity and EIN.

Don’t let administrative tax tasks intimidate you from launching your organic farm dreams. Sites like the IRS and your state department of revenue walk you through the quick online application process for essential registrations.

6. Setup Your Accounting

Proper financial record-keeping is crucial for organic farm success and IRS compliance. With significant upfront investments and ongoing operating expenses, tracking every dollar coming in and out of your new business is imperative.

Accounting Software

Accounting software like QuickBooks helps track income, expenses, and account balances and categorizes every transaction from invoices to loan payments automatically. QuickBooks seamlessly integrates with your business bank accounts, payment processors, and other financial tools through bank data feeds and API connections.

Hire an Accountant

Working with an accountant experienced with farms is key. A qualified accountant provides financial oversight by reviewing your books monthly or quarterly to catch missed deductions or inconsistencies. This prevents avoidable tax liabilities before year-end. They also advise setting up a foolproof chart of accounts tailored to farm finances from cultivation inputs to market stand sales.

Open a Business Bank Account

You should also maintain separate business banking and credit accounts from day one. Keeping all farm finances isolated from personal avoids any question when deducting expenses or reporting self-employment income. Take time applying for a business credit card in your farm’s legal name, which requires your EIN and revenue projections but has much higher limits than consumer cards.

7. Obtain Licenses and Permits

Before selling that first organic tomato or head of lettuce, your farm must comply with federal and state permitting requirements. Find federal license information through the U.S. Small Business Administration . The SBA also offers a local search tool for state and city requirements.

Key permits and licenses to secure early when starting an organic farm include:

Organic Certification: Arguably the most crucial license, USDA organic certification opens doors to premium pricing and product labeling after rigorous vetting. An accredited agent will audit your farm’s application detailing its growing/handling methods, inputs used, adjacent land usage, and more before awarding certification.

Farm Vehicle Registrations: Tractors, trucks, and other vehicles for field work or product distribution require DMV registration, license plates, and often commercial insurance. Specific farm-use license plates may provide discounts. Always consult your state’s DMV handbook for classifications.

Health Inspections/Permits: If selling any value-added products like jams, dairy, or eggs, expect to require health department permits and commercial kitchen inspections. Even lower-risk whole produce sold direct-to-consumer often needs a grower’s permit for traceability and safety.

Farm Employee Work Permits: Hiring any farm laborers, seasonal or permanent requires formally reporting new workers for payroll/Social Security purposes. Verify eligibility requirements through state and federal wage/hour divisions. Safety administration may also require posting permits publicly.

Pesticide Applicator License: While organic production prohibits certain pesticides, some natural insect deterrents still require special applicator permits from departments of agriculture when sprayed commercially. Structural fumigation or adjacent conventional farms could also trigger oversight.

Waste Management Plans: Animal and crop waste contain contaminants requiring responsible disposal from irrigation runoff to livestock facilities. Your local conservation district can define what waste handling/registration falls under environmental regulations.

8. Get Business Insurance

Given the hands-on physical labor and heavy equipment involved, having adequate business insurance is crucial for organic farm success. Among small businesses, farms suffer the second-highest rate of workplace injuries, even a minor issue can disrupt operations for days during key growing seasons.

Just as importantly, organic farms become targets for lawsuits given chemical-free food’s perishability and consumer safety concerns. Lacking proper coverage leaves your personal finances and livelihood exposed.

Scenarios where business insurance saves organic farms include:

• Workers Comp Claim: An employee injures their back while unloading produce for delivery. Without workers comp, their $50,000 medical and lost wage bill falls to you personally.
• Equipment Fire: Outdated wiring in your barn sparks a fire, destroying your tractor, tools, and shelter for animals. Repair bills run $75,000 without insurance.
• Foodborne Illness: A child sickens from E. coli traced to your farm’s raw milk. Their family sues for $100,000+ in medical costs without proof of liability coverage.

Claiming these unpredictable losses out of pocket could bankrupt early-stage operations. Various insurance policies shield against the myriad risks farms face:

• General liability insurance covering personal/property damage lawsuits
• Product liability protecting against food illnesses/recalls
• Farm vehicle, equipment, and crop/livestock insurance
• Workers compensation for employee injuries
• Umbrella insurance providing additional liability gaps

The National Sustainable Agriculture Coalition lists various risk-sharing programs through the USDA helping organic producers access affordable policies. Considering every possible “what if” scenario and having the proper protection will let you focus on growth rather than worrying over risks outside your control.

9. Create an Office Space

While much of your time operating an organic farm is spent in fields or packing sheds, securing proper office or administrative space is still imperative for business health. Keeping your financial records, customer files, and technical reference materials well-organized requires dedicated infrastructure.

Home Office

A home office is a great way to set up an administrative space when starting. It requires the lowest upfront cost, perhaps just a desk and computer for around $1000 to start. You can also count on tax incentives through the IRS, including deductibles of up to $1,500 per year.

Coworking Space

Shared, flexible small business environments like WeWork allow cost efficiencies from pooled amenities (WiFi, printers, conference rooms, etc.) while ditching home office distractions. Customizable private offices rent for $300-$600/month depending on location and feature access.

Retail Farm Stand Office

If selling your organic produce in person from a farm stand, allocating the cost back office or storage area to administrative tasks keeps things convenient while onsite for customers. Just be sure to secure computer equipment and sensitive files. The cost might only entail locking cabinets and a basic desk in an existing built-out space.

Commercial Office

Maximum productivity and security come from a dedicated ground floor or single-story office space separate from your home and farm facilities. Expect leases starting around $20/square foot in rural locations and locations and up to $40+ in large cities. While air conditioning, ample parking, custom layouts, and high-speed internet provide an ideal work environment, the monthly overhead far outpaces alternatives.

10. Source Your Equipment

An organic farm requires a sizable upfront investment in heavy equipment and tools to cultivate acreage and distribute products. Smart sourcing strikes a balance between critical functionality and startup budget realities. Consider these options for acquiring essential organic farm equipment:

The latest models of tractors, seeders, and harvesters offer cutting-edge productivity features and warranty protection. But new equipment commands premium pricing, a 30HP utility tractor from John Deere starts at around $33,000. Carefully evaluate true capacity requirements and shop specialty farm equipment dealers.

As with vehicles, used tractors and implements often provide huge cost savings of over 50% compared to new ones with just slightly more maintenance. Well-maintained older Deere/Kubota models retain decades of usable life. Facebook Marketplace , Craigslist , and specialty forums like Tractor House are the best places to start.

An affordable intermediate option, equipment rental through national chains like United Rentals or Sunstate Equipment allows accessing necessary trucks, excavators, etc. for seasonal projects without huge upfront buys. Delivery fees are often waived.

The ultimate flexible option, leasing production essentials like greenhouse structures, livestock housing, or irrigation systems means making lower monthly payments rather than giant lump sum buys. As with vehicles, equipment leases run 24-48 months with buyouts possible afterward, allowing upgrades as needs evolve.

11. Establish Your Brand Assets

Creating a consistent brand identity helps organic farms connect with consumers seeking transparency around food sourcing and production practices. Investing in core brand assets sends the right message.

Get a Business Phone Number

Start by securing a unique business phone line via providers like RingCentral rather than using a personal cell. Listing a professional number builds trust when customers call your farm stand asking if eggs are in stock or restaurants place wholesale orders. Expect basic business phone plans to start around $30/month.

Design a Logo

A polished logo also helps. Consider bright, welcoming designs that incorporate images of your fields, harvest bounty, or barn packed with happy livestock. Sites like Looka make logo DIY simple by providing organic layouts and iconography specific for farms based on your vision. Paid creation services start around $20.

Print Business Cards

With a logo file, build complementary brand assets that feel cohesive across business cards, merchandise, delivery truck signage, and banners for your organic farmers market booth. Printers like Vistaprint allow ordering professionally branded mugs, hats, and signage with bulk order discounts.

Get a Domain Name

Secure matching domain names and social media handles whenever branding your farm online. Establish credibility by purchasing your .com domain for around $12/year rather than using free platforms. Recommended sites like Namecheap provide domain privacy and auto-renew options.

Design a Website

Building a custom website on that domain is your farm’s virtual home. Use website builders like Wix for easy drag-and-drop layouts, accepting online orders, and seamless mobile optimization. Expect prices from free for basic sites up to $20/month for advanced e-commerce functionality. Alternatively, freelancers on Fiverr can custom-code sites for just $100.

12. Join Associations and Groups

While organic farming starts in the dirt, expanding your networks is crucial to growth. Local and national associations, events, and online groups provide camaraderie while sharing invaluable insights into increasing crop yields, accessing new markets, and advancing the organic movement.

Local Associations

Seek out a chapter of the Organic Farmers Association (OFA) to join passionate food producers striving for sustainability like yourself. The national organization has regional cooperatives across the U.S. focused on education programs and policy advocacy to benefit organic operations. Expect dues between $50-$150 annually.

Local Meetups

Hands-on workshops about reducing input costs and regenerative techniques led by researchers and veteran growers alike. Many events also facilitate business-to-business networking and recruitment for hard-to-fill seasonal positions. Use listing sites like Meetup to find upcoming conferences near you for fees typically under $75 per ticket.

Facebook Groups

And don’t overlook the power of the digital community within organic farmer Facebook groups. For example, the thousands of members of Organic farming freely exchange advice about drought-resistant seeds, no-till practices, and soil nutrients (primarily coming from organic and natural sources such as nightcrawlers ). Other groups like Organic Farming & Self-Sustainability also foster valuable mentoring.

13. How to Market an Organic Farm Business

Spreading the word about your chemical-free bounty requires strategic promotion to connect local foodies seeking transparency with how their produce is grown. Leveraging personal networks, customer referrals, targeted digital ads and specialty farm publications/events ensures a thriving CSA and stand bursting with loyal shoppers.

Referral Marketing

An initial customer base must be nurtured through impeccable customer service and community goodwill. Pay it forward by gifting basket subscriptions and gift card rewards for referrals. Word of mouth, more than any slogan or jingle, makes an organic farm endure.

Digital Marketing

Digital platforms provide targeted promotion opportunities:

• Geofenced Google/Facebook ads spotlighting in-season cherry tomatoes offered to nearby households for free delivery on orders over $15
• Instagram Reels showcasing the sowing and harvest process from seed to market basket to attract sustainability-focused Millennials
• YouTube tutorials answering FAQs on specialized techniques like vertical growing in converted shipping containers
• Search ads for niche keywords like “grass-fed lamb CSAs” in regional hubs
• Retargeting banners across sites reminding customers of the heirloom tomato options available.

Traditional Marketing

Don’t ignore traditional channels favored by older generations making up significant organic shopper segments:

• Booth at the weekly county farmers market provides product sampling and specials to capture shoppers’ attention
• Team sponsorships and jersey ads for local youth sports like 4H leverage parents’ goodwill
• Direct mail postcard blasts announcing seasonal U-Pick berry availability
• Listings in culinary/farm life publications like Edible Communities
• Flyer placements in health food stores, churches, and community boards

The keys to marketing an organic farm sustainably are conveying your authentic passion for the land and highlighting the care behind each pepper and greens harvest. Build community through welcoming event hosting and forging partnerships with chefs/florists/beekeepers. What your organic farm nurtures is much more than exceptional produce – it’s the future well-being of both people and the planet.

14. Focus on the Customer

While nurturing healthy topsoil and crops are central skills for organic farmers, cultivating lasting customer loyalty through stellar service is equally vital to viability. Just like ripening cantaloupe, the farm-to-table journey hinges on thoughtful handling of every patron interaction.

Focus first on hospitality basics within the farm stand like quickly addressing questions from curious first-timers or sampling juicy heirloom varieties to inform rather than push sales. Such guidance builds trust in your chemical-free mission.

Further boost satisfaction by pre-emptively resolving potential issues, from proactively reaching out if a CSA box runs light during a drought week to replacing damaged eggs en route. Refunding without question also speaks volumes.

Exceeding expectations on delivery instructions for a struggling single mom or adding a surprise lavender bouquet to large orders sparks joy and word-of-mouth referrals. Seek customer feedback regularly to continually improve operations.

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April 9, 2024

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Organic Farming Business Plan, Profitability, Schemes

Table of contents, importance of organic farming, the site is a key factor for business plan for organic farming, organic farm industry overview, government schemes for promoting organic farming, opportunities in organic farming business, organic farming market analysis business plan, organic agriculture business ideas, financing your organic farming business, the profitability of organic farming in india, advantages of organic farming, key characteristics of the organic farming business.

Business plan for organic farming: Organic farming mainly involves the cultivation of plants and rearing of animals in natural ways. Organic farming relies on ecologically balanced agricultural principles such as crop rotation, green manure, organic waste, biological pest control, organic fertilizers, and rock additives. A successful organic farming business always includes a good business plan. It is the system of production that is capable of avoiding or majorly block the use of pesticide, synthetically compounded fertilizers, livestock feed additives, and growth regulators. The flexible organic farming system relies upon crop residues, green manure, weeds, crop rotations, legumes, aspects of biological pest control, animal manures, and etc. Methods of organic farming are used in developing countries, majorly because of economics and fewer resource of chemicals.

A guide to organic farming business plan

Different organic farming methods

Organic farming is to release nutrients to the crops for increased sustainability in a pollution-free environment. It aims to produce a crop with nutritional value. There are different methods by which organic farming is practiced are as follows;

Fertilizers

Applying organic fertilizers without prior knowledge of their properties may cause crop yield decline under low application or pollute the environment. The application of organic fertilizers to ponds mainly depends on the fertilizer form and moisture content. Organic matter could be applied through the application of manure, compost, and animal by-products, such as feather meal or blood meal.

Crop diversity

Crop diversity is an aim of organic agriculture system, and a number of advantages can be obtained by the use of crop diversity such as improved crop yield, and reduced weed, diseases, and pests. However, a legal and logistic problem counteracts the diversification of crops.

Soil management

After the cultivation of crops, the soil loses its nutrients and quality depletes. Organic agriculture initiates the use of natural methods to increase the health of the soil. Soil management focuses on the use of bacteria that is present in animal waste helps in making the soil nutrients more productive to enhance the soil.

Pest control

Organic pesticides are derived from naturally occurring sources. These contain living organisms such as the bacteria Bacillus thuringiensis, used to control caterpillar pests or plant derivatives such as pyrethrins or neem oil. Mineral-based inorganic pesticides such as sulfur and copper are allowed.

In addition to pesticides, organic pest control integrates biological, cultural, and also genetic controls to minimize pest damage. Biological control utilizes the natural enemies of pests, that are predatory insects (e.g., ladybugs) or parasitoids (e.g., certain wasps) to attack insect pests. Pest cycles can be disrupted with cultural controls, of which crop rotation is widely used. The use of such varieties and the planting of genetically diverse crops provide genetic control against pests and plant diseases.

Crop rotation

In this organic farming, farmers do not grow the same crops on the same section of land year after year. If you are thinking about why there are numerous advantages associated with this practice, this technique naturally replenishes the soil as diverse plants donate nutrients to the soil. And, disrupting the habitat of weeds and insect pests helps control them.

Weed management

Weed is the unwanted plant and that grows in agricultural fields.  Organic agriculture farming focuses on lowering weed and not removing it completely. The most widely used weed management techniques are;

Mulching – Mulching is a process where we use plastic films or plant residue on the surface of the soil to block the growth of weed.

Mowing or Cutting – Mowing is the removal of weeds’ top growth.

• The environment benefits as natural habitat sources are less threatened.
• And it provides healthier food for people.

You should not miss the Poultry Farm Subsidy, NABARD Schemes .

The site plays an essential role in any venture to be successful. An organic farm’s location generally determines how the venture will turn out.

The organic farm site must be near a clean water source – water is a non-negotiable resource for crop growth and health. If the water source is far, it is more difficult to manage the irrigation process. This is a tedious consideration to make but is crucial for the success of the venture.

The proximity of the farm to the marketplace plays a big role in the sustainability of the farm. The farm’s closeness to the market allows for the easy transport of creating for selling. And, this helps save costs when transporting materials to the farm. However, site selection should be aligned with the purpose of the organic farm. The purpose of the farm determines its size.

The organic farm industry includes farms that mainly cultivate organic fruit, vegetables, grains, and other crops or livestock. It is very important to categorically state that organic farming does not involve the use of artificial chemicals, pesticides, and fertilizers, or genetically modified organisms.

The organic farming industry provides a variety of farm produce including beef, fruit, vegetables and also poultry. These farm products are free from artificial chemicals, pesticides, fertilizers, or genetically modified organisms. The organic farming business has been one of the economy’s best performing industries over the last half a decade. Global demand for the organic farm is rising due to increasing health concerns about food.

The Indian government will offer capital investment subsidy for organic farmers. It is offered through the National Centre of Organic Farming (NCOF) under the Department of Agriculture and Cooperation with the National Bank for Agriculture & Rural Development (NABARD). The prime objective is to readily obtainable organic resources for improving farm productivity without letting soil health.

Incentives are obtainable for reducing dependence on chemical aids and promote the conversion of organic wastes into nutrition sources for plants. Credit linked and back-ended subsidies are obtainable.

Under organic farming, there are a number of categories and you can select any one of them and specialize in that particular category.

If you have a proper financial background that can withstand loss at times, you can concentrate on the production of organic fruits and organic vegetables. The term loss was indicated due to the perishable nature of fruits and also vegetables. In this business category, its either success or loss.

Organic medicines are another group of products that will create more income. The shift is not to organic food alone, medicines are taken when it is organically produced.

You may also check the Aquaculture Subsidy, Loan, Eligibility, License .

Organic farming is a newly emerging concept with huge success and used to increase your profits. In an organic business view, the demand for these products increases when the supply is less. So, prices can be higher than the normal prices and this will not affect your sales. From reports, it is said that there are fewer outlets for buying organic products and there is a mismatch in supply and demand.

Market trends

One of the regular trends in the commercial organic farming line of business is that most players in the industry are no longer concentrating only on organic crop farming . They now find it easier to run organic crop cultivation and organic livestock farming . The fact those organic foods are expensive, the sale for organic food is on the increase and it is indeed profitable.

Organic farmers are known to pay attention to one or more organic products depending on farm location and types of farms suitable to the local climate. Market trends can influence farmers’ choices of more profitable crops or produce. Organic vegetables and organic fruits are the most established products provided by the industry. They have the highest demand as they are considered susceptible to chemical residues. Lastly, with the recent advancement in technology, organic farmers can now comfortably produce a variety of crops in a country where such crops can hardly survive and in places where there are few farmlands.

Organic Produce Farm – One of the popular ways you can get into the organic agriculture business is to grow organic produce. This is similar to regular produce farming, just without the chemical pesticides and fertilizers mainly used by conventional farms.

Organic Dairy Farming  – You can start a dairy farm where you use natural processes and organic feed for the cows.

Organic Livestock Farming – Or you could start a livestock farm where you use natural materials and processes to raise your livestock. Organic livestock farmers want to use organic animal feed.

Organic Fish Farming – There is some debate about how organic farmed fish can really be.

Organic Market – You could open up own organic food market where you sell organic items directly to consumers.

Farmers Market Vending – There are plenty of farmers’ markets around the country that you can rent space from to sell your organic foods.

Organic Farmers Market – Or you could actually organize very own farmers market and just work with organic farmers.

Orgnic Herb Growing – If you have a smaller space, then you can grow herbs to package for sale to consumers or retail outlets.

There are not several companies that have sufficient working capital on their own to completely finance their business by themselves.

A producer organization will need capital for the below purposes;

• Investments such as buildings, trucks, motorbikes, furniture, computers, and processing equipment, etc.
• Working capital such as payment of personnel, running cost of the business, and inputs
• Trade finance for buying of harvest
• Capital to overcome start-up losses

If the right market can be accessed then organic farming in India is profitable. Profit increases in mostly two ways;

• The cost of farm input reduces by using crop and also animal residue, organic waste as bio-fertilizer.
• Market value and demand for an organic product is high compared to traditionally developed farm produces.

There is a very good export potential of organic produces but organic farming methods should be strictly followed and along with organic certification from the authorizing body.

• Farmers can reduce their production costs as they do not need to buy expensive chemicals and also fertilizers.
• In the long term, organic farms save energy and also protect the environment.
• And the pollution of groundwater is stopped.
• Organic crops are structurally and also metabolically superior to other crops. Such crops are less vulnerable to rotting or molding and stored for a protracted period.
• Input costs are considerably lower compared to conventional farming.
• Organic plants can tolerate drought better and can grow even in areas with meager irrigation system facilities.
• Organic produces are tastier as the sugar content in them is richer due to better quality nutrients absorbed by crops.
• Plant diseases, weeds, and pests are naturally repelled through scientific crop rotation and other methods.
• Yields from the same piece of land are higher.
• Security of income and rich returns on investment assured.

The key characteristics of organic farming include;

• Providing crop nutrients indirectly using relatively insoluble nutrient sources which are made obtainable to the plant by the action of soil micro-organisms.
• Nitrogen self-sufficiency through the use of biological nitrogen fixation and efficient recycling of organic materials.
• Protecting soil quality using organic material and also encouraging biological activity.
• Indirect provision of plant nutrients using soil microorganisms.
• Nitrogen fixation in soils using legumes.
• Rearing of livestock, taking care of housing management, nutrition, health, rearing, and breeding.
• Care for the larger environment and also the conservation of natural habitats and wildlife.

Incase if you like this: Organic Hydroponic Gardening .

I am looking to work on my passion of food with a sustainable organic farming business startup…have few ideas that I need to work on with some established industry professional and organization to take it forward…

interested in organic vegetable farming

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Farm Business Planning

Farm Business Planning is key to beginning farmer success.

It helps beginning farmers :

• Plan for the economic sustainability of a new farm enterprise.
• Obtain funding to purchase land, equipment and other resources from lending institutions, investors and/or grant making agencies.
• Articulate what their farm will look like.

On this page, we compiled free farm business planning resources to help you understand what a formal business plan is, and how to start planning your farm business. Sections include:

• Developing a Farm Business Plan
• Enterprise Budgeting

Enterprise budget resources are included on the farm business planning page because such tools are usually essential in helping you to develop your business plan.

Planning your farm business involves more than is outlined on this page alone. You’ll probably also be interested in funding (loans/grants) , farm incorporation , and risk management . Our  starting a farm page is worth visiting first. Also, you might find the following article helpful, because it touches on many farm business planning topics: Farm Products, What to Charge: Marketing, Price, Calculating Costs, Strategy and Much More .

1. Developing a Farm Business Plan

A  business plan  is a decision making tool that takes the form of a formal document. It states your business goals, why you think you can achieve them, and lays out your plan for doing so. Farm business planning is also a process, not an end product. A business plan is a work in progress, which farm business owners or operators will want to revisit regularly. 

Planning and Funding Your Farm Business  from the Cornell University Small Farms Project has lots of important and useful farm business planning resources.

Rural Businesses  is a web and print publication from the Minnesota institute for Sustainable Agriculture (MISA).

Building a Business Plan for Your Farm: Important First Steps  is a 20 page farm business planning publication that discusses the initial steps to help you move toward writing a formal business plan.

The Center for Agroecology has a Small Farm Business Planning publication that goes over many of the basics in a step by step format.

Building a Sustainable Business: A Guide to Developing a Business Plan for Farms and Rural Businesses is a farm business planning publication available from SARE.

Do I need a Business Plan for my Farm? is a web resource from the New England Small Farm Institute. It’s a great place to get started.

AgPlan  from the University of Minnesota helps rural business owners develop a business plan for free, while also offering sample business plans for ideas, and a way to print or download your plan.

Developing a Farm Business Plan includes several helpful resources from the USDA National Agricultural Library’s Rural Information Center.

Organic Farm Business Planning Page  from North Carolina State University features a number of publications and links related to financial planing for organic farmers.

Agricultural Business Planning Templates and Resources   is an ATTRA publication most relevant to smaller-scale or alternative agricultural entrepreneurs.

Beginning Farmer and Rancher Resources offers comprehensive resources on Bookkeeping and Other Basics ; Cash Flow Budgeting and Managing Debt ; Small Farm and Ranch Income Taxes , and more.

Purdue University’s Center for Food and Agricultural Business  has educational resources to explore, such as the New Ventures in Food and Agriculture in Indiana , which offers business planning assistance.

Purdue University Cooperative Extension offers strategic farm business planning tools for commercial farm producers.

Penn State University College of Agricultural Sciences has many Business Planning tools and information.  Penn State Cooperative Extension has a Developing a Business Plan page. Penn State also has a Farm Business Plan Template that allows you to plug in your information and create a basic business plan.

The U.S. Small Business Administration  works with local partners to counsel, mentor and train small businesses. It is worth getting to know their programs and connect with your local office.

The Martindale Center Reference Desk has an extensive  compilation of links to calculators, applets, spreadsheets, courses, manuals, handbooks, simulations, animations, videos and more. Martindale’s Agriculture Center can be of great use to farmers making business plans.

2. Enterprise Budgets

Enterprise budgets project costs and returns for a particular farm production practice. You can use enterprise budgets to make smart business management decisions, and to help you develop a viable business plan.

Enterprise Budgeting Tools of all sorts from the Agricultural Marketing Resource Center, including organic crop budgeting tools, many vegetable budgeting tools, the crop conversion tool for side-by-side crop comparisons, specialty crop and livestock budgets, hydroponics budgets, wind calculators, composting calculators, manure calculators, distillers grain budgets, biomass calculators and specialty foods calculators.

Introduction to Farm Planning Budgets for New and Beginning Farmers (Virginia Tech)

Importance and Use of Enterprise Budgets in Agriculture   (University of Nevada)

Enterprise Budgeting (Kerr Center)

Organic Specific Enterprise Budgets

• Enterprise Budgets and Production Costs for Organic Production (ATTRA)
• Organic Crop Production Enterprise Budgets and Information   (Iowa State)
• Organic Enterprise Budget (Kansas Rural Center)

More Enterprise Budget Pages and Information

• Enterprise Budgets List (Virginia Cooperative Extension)
• Dairy Sheep Enterprise Budget (Center for Integrated Ag Systems, UW-Madison)
• Crop Budgets (University of Maryland)
• Farm Management Enterprise Budgets (Ohio State)
• Alabama Enterprise Budget Summaries (Alabama A&M and Auburn) 
• Start developing your business plan with the resources at   https://www.beginningfarmers.org/farm-business-planning/
• You can find more gr eat farming resources at   https://www.beginningfarmers.org/additional-farming-resources/

Business Plan Template for Organic Farming

• Great for beginners
• Ready-to-use, fully customizable Subcategory
• Get started in seconds

Are you ready to sow the seeds of success in the organic farming industry? With ClickUp's Business Plan Template for Organic Farming, you can cultivate your dream into a thriving reality!

Crafted specifically for entrepreneurs and individuals venturing into the organic farming business, this template helps you outline your goals, strategies, and financial projections with ease. Here's what this template offers:

• A comprehensive framework to map out your business model
• A step-by-step guide to identify target markets and develop marketing strategies
• Tools to forecast expenses, revenue, and profit margins
• A platform to attract investors and secure loans for your organic farming venture

Don't let your dreams wilt away! Plant the seeds of success with ClickUp's Business Plan Template for Organic Farming today.

Business Plan Template for Organic Farming Benefits

When using the Business Plan Template for Organic Farming, you can expect the following benefits:

• Clearly define your goals, strategies, and financial projections for your organic farming business
• Attract potential investors or secure loans by presenting a well-structured and comprehensive business plan
• Identify potential challenges and risks in advance, allowing you to develop strategies to mitigate them
• Ensure that your organic farming operations are aligned with industry best practices and regulations
• Track the progress of your business and make informed decisions based on your financial projections and goals

Main Elements of Organic Farming Business Plan Template

When it comes to starting your organic farming business, ClickUp's Business Plan Template has got you covered with all the essential elements:

• Custom Statuses: Keep track of your progress with statuses like Complete, In Progress, Needs Revision, and To Do, ensuring that every step of your business plan is accounted for.
• Custom Fields: Add vital information to your plan using custom fields like Reference, Approved, and Section, so you can easily organize and analyze your data.
• Custom Views: Access multiple views such as Topics, Status, Timeline, Business Plan, and Getting Started Guide, allowing you to visualize your plan from different angles and stay on top of your goals.
• Task Management: Utilize ClickUp's task management features like due dates, assignees, comments, and attachments to collaborate with your team and ensure that every aspect of your business plan is addressed.
• Document Collaboration: Leverage ClickUp's Docs feature to create and collaborate on your business plan in real-time, ensuring that all stakeholders are on the same page and can contribute seamlessly.

With ClickUp's Business Plan Template for Organic Farming, you'll have all the tools you need to create a comprehensive and persuasive plan for your organic farming business.

How To Use Business Plan Template for Organic Farming

Crafting a business plan for your organic farming venture is crucial for success. Follow these six steps to effectively use the Business Plan Template for Organic Farming in ClickUp:

1. Define your mission and vision

Start by clearly outlining your mission and vision for your organic farming business. What is the purpose of your farm? What values do you uphold? This will help you establish a strong foundation for your business plan.

Use a Doc in ClickUp to articulate your mission and vision statement.

2. Analyze the market

Conduct thorough research on the organic farming industry and identify your target market. Who are your potential customers? What are their needs and preferences? Understanding the market will help you position your farm effectively.

Utilize the Gantt chart in ClickUp to create a timeline for your market research and analysis.

3. Develop your farm's offerings

Detail the products and services your organic farm will provide. What crops will you grow? Will you offer livestock or value-added products? Outline your pricing strategy and any unique selling points that set your farm apart.

Create tasks in ClickUp to identify and categorize your farm's offerings.

4. Create a financial plan

Develop a comprehensive financial plan that includes projected revenue, expenses, and profit margins. Consider costs such as land acquisition, equipment, labor, and marketing. This will help you understand the financial feasibility of your organic farming business.

Use custom fields in ClickUp to track and calculate your projected financial data.

5. Outline your marketing strategy

Determine how you will promote your organic farm and reach your target audience. Will you use social media, local markets, or direct sales? Outline your marketing channels, branding, and advertising strategies to ensure maximum visibility and customer engagement.

Use the Calendar view in ClickUp to schedule marketing activities and campaigns.

6. Set goals and milestones

Establish short-term and long-term goals for your organic farming business. These could include production targets, revenue milestones, or sustainability objectives. Break down these goals into actionable tasks and assign them to team members.

Utilize the Milestones feature in ClickUp to track and celebrate your progress towards achieving your goals.

By following these steps and utilizing the Business Plan Template for Organic Farming in ClickUp, you'll be well-prepared to launch and grow a successful organic farming business.

Get Started with ClickUp’s Business Plan Template for Organic Farming

Entrepreneurs or individuals interested in starting an organic farming business can use the ClickUp Business Plan Template for Organic Farming to create a comprehensive and professional business plan that will help attract investors or obtain loans.

First, hit “Add Template” to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.

Next, invite relevant members or guests to your Workspace to start collaborating.

Now you can take advantage of the full potential of this template to create a successful organic farming business plan:

• Use the Topics View to organize your business plan into different sections, such as Executive Summary, Market Analysis, Financial Projections, etc.
• The Status View will help you track the progress of each section, with statuses like Complete, In Progress, Needs Revision, and To Do.
• Utilize the Timeline View to set deadlines and milestones for each section of your business plan.
• The Business Plan View will give you a comprehensive overview of your entire plan, allowing you to easily navigate and make edits.
• Use the Getting Started Guide View to access helpful resources and tips on how to create a successful organic farming business plan.
• Customize the custom fields, such as Reference, Approved, and Section, to add additional information and categorize your business plan.
• Monitor and analyze your business plan to ensure it is comprehensive, well-structured, and ready to present to investors or lenders.
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Organic FAQs

Frequently asked questions about organic farming, 1 - what is organic farming and why is it important.

Organic farming is agriculture that makes healthy food, healthy soils, healthy plants, and healthy environments a priority, along with crop productivity. Organic farmers use biological fertilizer inputs and management practices such as cover cropping and crop rotation to improve soil quality and build organic soil matter. By increasing the amount of organic matter in the soil, organic farmers enhance the soil’s ability to absorb water, reducing the impacts of drought and flooding. Improving soil organic matter also helps it to absorb and store carbon and other nutrients need to grow healthy crops, which, in turn, are better able to resist insects and diseases.

Organic production systems do not use genetically modified (GM) seed, synthetic pesticides or fertilizers. Some of the essential characteristics of organic systems include design and implementation of an organic system plan that describes the practices used in producing crops and livestock products; a detailed recordkeeping system that tracks all products from the field to point of sale; and maintenance of buffer zones to prevent inadvertent contamination by synthetic farm chemicals from adjacent conventional fields.

2 - What does certified organic mean and how is certification regulated?

The National Organic Program (NOP) develops the rules and regulations for the production, handling, labeling, and enforcement of all USDA organic products. This process, referred to as rulemaking, involves input from the National Organic Standards Board (a Federal Advisory Committee made up of fifteen members of the public) and the public.

The national standard states that organic food must be produced without the use of conventional pesticides, petroleum-based fertilizers, sewage-sludge-based fertilizers, herbicides, genetic enginerring (biotechnology), antibiotics, growth hormones, or irradiation. Animals raised on an organic operation must meet animal health welfare standards, not be fed antibiotics or growth hormones, be fed 100% organic feed, and must be provided access to the outdoors.* Land must have no prohibited substances applied to it for at least three years before the harvest of an organic crop. The NOP states that all farms, ranches, and handling operations that display the “USDA Organic” seal must be certified organic by the state or by a private agency, accredited by the USDA, to ensure the NOP standards are followed.

To gain organic certification, a farmer (of cropland, pasture or livestock) submits an organic system plan to an accredited certifier each year. This documents how the farmer adheres to NOP standards. Certified organic farms and processing facilities undergo annual inspections to verify that they are meeting the standards. Organic inspectors examine all elements of a farm operation for adherence to the standards and verfiy that the farm is being managed according to the farmer’s organic system plan.

3 - Can GMOs be used in organic products?

The use of genetic engineering, or genetically modified organisms (GMOs) is prohibited in organic products. This means an organic farmer can’t plant GMO seeds, an organic cow can’t eat GMO alfalfa or corn, and an organic soup producer can’t use any GMO ingredients. To meet the USDA organic regulations, farmers and processors must show they aren’t using GMOs and that they are protecting their products from contact with prohibited substances from farm to table.

4 - How does organic farming help the environment?

Organic farms use production practices with environmental benefits such as water management practices, no-till or minimum tillage, habitat maintenance for beneficial insects and vertebrates, and biological pest control. These ecologically protective practices contribute to enhanced ecosystem services and benefit water quality, soil health, and biodiversity.

Conventional farming typically uses minimal crop rotations, growing the same single crop year after year on the same land. This practice, known as mono cropping causes the depletion of nutrients and minerals. In order to continue growing crops in this depleted soil, nutrients and minerals must be added back in the form of hydrocarbon based fertilizers and mined minerals such as phosphate. Conventional GM farming is dependent on earth-based non-renewable resources. Monocultures and the resulting poor health open the way for infestations of insects, diseases and weeds. Healthy bio-diverse soil keeps these infestations in check. The lack of biodiversity requires synthetic pesticides and herbicides to be used, further destroying the national soil biology.

5 - How does organic farming improve soil and water quality?

Using biological forms of fertilizer such as compost, animal manures, and legume cover crops, builds soil organic matter, even when routine tillage is used for weed control. Building soil organic matter increases soil water retention and nurtures more active soil microbial communities that retain nitrogen in the soil longer and transform it into non-leachable gaseous forms. There is a small but telling body of research in the US that suggests that improved soil quality influences the ability of crops to withstand or repel insect attack and plant disease.

Organic biological fertilizer sources release their nutrients slowly over time, providing more opportunity for the nitrogen to be digested by soil organisms and taken up by crops before leaching below the root zone. Increased soil organic matter in the soil leads to tighter nutrient cycling and greater water holding capability in organically managed soils, with the result that nitrate leaching from groundwater is about half that of conventionally farmed soils. Recent data from a 12-year study shows that fields under organic management had half the annual nitrate leaching losses than fields under conventional management.

For additional information on this topic, download OFRF’s educational guides.

6 - What is the current state of certified organic agriculture in the U.S.?

The results of the 2016 Certified Organic Survey, conducted by the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS), show that sales of certified organic production continued to increase in 2016. U.S. farms and ranches produced and sold $7.6B in certified organic commodities, up 23% from 2015, demonstrating that there is increased demand for organic products and opportunities for growth.

The number of organic farms increased 11% to 14,217 and the number of certified organic acres increased 15% to 5.0M. California led in both categories, with 2,713 certified farms and 1.1M acres, 21% of total U.S. certified organic land.

Ten states accounted for three fourths (77%) of 2016 sales. With $2.9B in certified organic commodity sales, California continued to lead the nation, accounting for 38% of the U.S. total.

Some states with lower volume of sales in 2015 experienced significant increases in 2016.

Of 2016 sales, 56% was for crops ($4.2B), and 44% for livestock, poultry and related products ($3.4B). Milk and eggs were the top two certified commodities sold in 2016. Milk, valued at $1.4B, was up 18% from 2015, and eggs, at $816M, increase 11% and $0.7B, respectively, followed by broiler chickens valued at $0.4B. Among crops, the top selling commodities were apples, lettuce, and strawberries.

USDA– NASS, Census of Agriculture – 2016 Organic Survey  

7 - Are organic yields lower?

Farm data from USDA producer surveys show organic crop yields may be lower than those of conventional production. The yield differences estimated from USDA farm data are similar to those estimated by comparing USDA’s 2011 Certified Organic Production Survey with USDA’s 2011 Crop Production Report. The yield differences revealed by survey data may be due to the unique problems encountered by organic systems outside of the experimental setting, such as effective weed control.

However, while organic agriculture may produce lower yields when compared to conventional agriculture, organic farming is often more profitable, delivers more environmental benefits, and is healthier in terms of increased nutritional benefits and reduced dietary pesticide exposure.

8 - Why is it important to invest in organic research?

Public funding such as USDA’s Organic Agriculture Research and Extension Initiative (OREI) and private funding from organizations such as OFRF, is critical to training the next generation of scientists and developing new talent. Research delivers valuable information, tools, and resources that help all farmers—both organic and non-organic—increase the environmental and economic sustainability of their operations. The continued growth of organic agriculture requires investment in research, education, and extension programs that provide sound information and assistance to America’s farmers. The results from  OFRF’s evaluation of USDA research  and 2016 National Organic Research Agenda provide a thorough analysis of organic research to date and current priorities for research based on a national survey of organic farmers.

9 - What is the Organic Agriculture Research Act?

H.R. 2436, the Organic Agriculture Research Act of 2017, was introduced by Representative Chellie Pingree (D-ME) with cosponsors Representative Dan Newhouse (R-WA), and Jimmy Panetta (D-CA). This bipartisan legislation was approved in the 2018 Farm Bill and will provide $395 million for organic agriculture research and education over the next ten years. This milestone is the biggest win for organic farming in the Farm Bill in decades, securing permanent funding for organic research at USDA.

10 - What organic provisions were approved in the 2018 Farm Bill?

11 - Why does organic cost more?

The cost of organic food is higher than that of conventional food because the organic price tag more closely reflects the true cost of growing the food: substituting labor and intensive management for chemicals. These costs may include cleanup of polluted water and remediation of pesticide contamination.

12 - Where can beginning organic farmers and farmers transitioning to organic get assistance?

USDA offers several programs and tools to support the success of organic farmers. The Environmental Quality Incentives Program (EQIP) from USDA Natural Resources Conservation Service (NRCS) helps producers plan and implement conservation practices to support the environmental sustainability of their organic operations.

13 - How does organic farming help mitigate climate change?

Climate change poses critical risks for farmers and ranchers and endangers the soil, water, and other resources on which food production depends. Rising temperatures have already intensified droughts, heat waves, and storms, making it harder to grow crops and raise livestock.

The good news is that organic systems that emphasize soil health help farmers and ranchers increase resilience to the impacts of climate change. There is also extensive research demonstrating the potential of organic systems to reduce agriculture’s contribution to climate change (i.e., mitigate climate change).

Organic systems do this by capturing and storing more carbon (CO 2 ) in the soil (carbon sequestration).

While organic systems require some level of physical disturbance to control weeds, they eliminate synthetic inputs and can significantly reduce tillage. Reduced tillage, crop diversification, cover cropping, organic amendments, and sound nutrient management can enhance carbon sequestration and build climate resiliency in organic agricultural systems.

They also release fewer greenhouse gases .

Organic farmers do not use synthetic pesticides and fertilizers, one of the primary contributors of greenhouse gases.  Healthy soils help crops obtain nitrogen, phosphorus, and other nutrients from organic soil organic matter. This reduces the need for fertilizers that can threaten water quality and minimizes the release of greenhouse gases from soils.

Check out our climate toolkit to learn more.

14 - How does organic farming increase resilience to climate change?

Healthy soils form the foundation of organic production. Healthy soils have good structure (tilth), which allows them to absorb and hold moisture, drain well, maintain adequate aeration, and foster deep, healthy crop root systems. Such soils sustain crops through dry spells, require less irrigation water, and undergo less ponding, runoff, and erosion during heavy rains.

The Natural Resources Conservation Service (NRCS) has identified four guiding principles that support healthy soils: 1) minimize disturbance, 2) maximize biodiversity, 3) keep soil covered, and 4) maintain living roots. These principles provide the foundation for a resilient farm system.

The USDA National Organic Standards require certified producers to implement crop rotation, cover cropping, tillage, nutrient management, and other practices that improve and maintain the physical, chemical, and biological condition of the soil.

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6 Tips How to Start an Organic Food Business with Appetible Potential

Organic food production started in the late 1940s, and since then more and more people have rushed to fill their shopping carts with whatever is labeled “organic”. As a result of heightened demand, recent years have witnessed a growing interest in learning how to start an organic food business, especially as consumers look to find ways around global inflation in food prices and try to shift to more healthy-eating habits.  ‍

According to Grand View Research , a US-based research and consulting center, health concerns have caused the organic food industry to boom globally , with a market size of over $180 billion in 2021 and a predicted (CAGR) of 13%in 2022.

The popularity of organic farming also shows that people want to reconnect with nature through their food.  Mahatma Gandhi once said that we would forget ourselves the moment we forget how to dig the earth and tend the soil. Luckily, it seems we're not coming anywhere close to forgetting that.  Today, the thriving organic food agricultural segment now offers a wide range of food business ideas throughout the supply chain . However, like any other business, it requires planning, knowledge, arduous work, and solid documentation. This article offers a step-by-step tutorial on starting an organic food business and, most importantly, tips you’ll need to get off the ground and about obtaining the necessary funding. We’ll cover the following: ‍

• Introduction to organic foods
• Why start an organic food business?
• 6 expert tips about starting an organic food business
• How to fund an organic food business and manage financials ‍

Starting an organic food business and need to find reliable funding quickly? Duckfund provides affordable financing for small businesses with higher approval rates, lower interest rates, and easy applications.

1. Introduction to organic foods

Do you remember the villainous apple that Snow White ate? Was it organic? It's safe to say the answer is no because it was poisoned. Similarly today, many consumers now consider many fruits to be overly exposed to pesticides, insecticides, herbicides, etc. Before wondering how to start an organic food business, it's important to understand its main component, "organic food."  Organic food is any type of fresh or processed food coming through organic produce without the use of synthetic chemicals, such as chemical fertilizers, herbicides, and pesticides. It also does not contain genetically modified organisms (GMOs). To be labeled as "organic," all organic food items must meet the United States Department of Agriculture standards and be inspected by a government-approved certifier. Furthermore, all companies involved in processing organic food before it reaches the local market store or restaurant must be certified.  ‍

The main types of organic foods are:

Organic fruits and vegetables .

These are the most popular available organic foods on the market. According to the Organic Trade Association , which represents over 9,500 organic businesses across 50 states, organic vegetables and fruits comprised about 15% of the total product market last year, with more than $21 billion in revenue

Organic dairy

Due to their higher content of omega-3 fatty acids and the lack of any use of hormones or antibiotics, organic dairy products have become popular in recent years. The annual sales of organic dairy in the US were about $2 billion in 2021, based on the survey conducted by the Organic Trade Association.

Organic meat

Organic meat is a considered a healthy food option and comes from animals that were raised without receiving antibiotics, hormones, or growth stimulants.

Organic fish & seafood

Organic fish are farmed fish such as salmon, trout, cod, halibut, and sea bass. However, the caught fish from rivers, lakes, and the open sea aren't considered organic as it's uncertain what the fish have eaten.

2. Why start an organic food business?

Due to the high demand and rapid exponential growth, the organic food market is extremely profitable. Ever since people started to pay more attention to what they eat and now increasingly choose to adopt healthier lifestyles, organic food’s popularity has grown for its wide range of advantages: ‍

• It contains no or fewer synthetic chemicals, such as insecticides and pesticides, which can leave a residue on the produced products.
• Compared to conventional agriculture, organic farming is more environmentally friendly and sustainable.
• Genetically modified organisms, also known as GMOs, aren’t used in the food product's growth.
• The absence of preservatives pushes toward fresher food compared to non-organic food.
• They are richer in nutrients like omega-3 fatty acids. ‍

Likewise, the demand for organic food in the US is rising and offers great investment opportunities for business owners. The following statistics might change your mind if you still haven’t decided if it’ll be worth it to learn how to how to start an organic food business: ‍

• According to the Organic Produce Network , the United States saw a 14.2% organic product sales growth by the end of 2020. 
• According to Statista , organic food sales in the U.S. amounted to about 57.5 billion U.S. dollars in 2021 .
• According to NASS, the National Agricultural Statistics Service , there were 14,217 certified organic farms in the U.S. in 2016, which increased to 16,585 in 2019 .
• According to FAO, the UN Food and Agriculture Organization , 48% of certified organic farms in the U.S. have been operating for over 10 years .  ‍

The organic food business looks profitable, sustainable, growing, and competitive based on the above. However, there is still plenty of room for a new business to join such a fresh market. ‍

3. Expert advice about starting an organic food business

Tip 1: find out everything you can about the organic food industry.

Before starting an organic food business, learning the ins and outs of the industry is essential.  First things first, try answering the following questions about your anticipated organic food business:

• What is the target market's estimated size?
• What are the national and local rules and regulations?
• Who are the potential competitors?
• Who is the target customer segment, and how do you get their attention?

Thorough market research, competitor review, and targeted customer analysis will answer these questions while mitigating the risks associated with starting an organic food business. Remember that establishing an organic food business may be difficult for many reasons, such as the use of farming procedures that can be more expensive than non-organic alternatives. 

Tip 2: Choose a suitable organic food business type

The organic food industry is vast, with numerous business models, ranging from opening an organic food store or a food truck to selling organic farming supplements and equipment for specific products (such as avocados ). As a result, after gathering information about the target market, the next step on your list of how to start an organic food business is to decide what you want to do. To make things easier for you, answer the following questions:

• What types of organic food business can you do?
• In the targeted market, what type of business is more profitable?
• How will you fund the business? Will it be personal funds, or will you request an organic farming loan?

Tip 3: Choose your physical business location wisely

Choosing a suitable physical location for your organic food business is important. It should be a time-consuming step that is not made lightly because you’ll need to pick a place where there's a better chance of meeting your target audience. For example, you may consider choosing a prime location for your organic food store business in a high-density area accessible by all means of transportation with few to no competitors.  Or you may choose a rural area that receives a lot of tourist visitors.  Whether you intend to rent or purchase the property, act quickly to secure it after finding the ideal location.

Tip 4: Build a unique brand identity for your organic food business

Organic food business needs a name and brand identity like any other. Choosing a name for your company can be challenging, so be careful.  As an organic food company, you’ll need to invest more time than normal in this step considering that marketing plays such an important role in the competitive landscape of the industry. 

Here are some smart tips for picking that enduring name:

Pick a short and compelling name.

Even people who have long names tend to abbreviate them to something memorable. It must be short and simple with no more than one or two words—and obviously still reflect the nature of the business.

Avoid copycatting and pick an original name

Use Google and social media platforms to search competitors' names and avoid using one already in use. Try to pick a name that is completely original that does not already have traffic going to different sources.  Uniqueness is the secret to grabbing attention.

Create a well-designed and meaningful logo

A logo is the foundation of the brand identity, which will introduce the company to the public after deciding on the name. Ensure the logo design is flawless by selecting the appropriate colors, logotype, and typography.

Tip 5: Consider various legal entity forms for your organic food business 

As an initial step for business registration, it impacts the business ownership level, personal liability, taxing process, etc. Find out more information about each business type on the IRS's official website . For now, here is a short description: ‍

Sole proprietorship

In this type, you and your business are considered one entity and will be taxed and labeled accordingly. It is the default type and will be used for companies that didn't set up any structure.

Partnership

The same as a sole proprietorship, but the entity is divided among the partners and similarly for legal issues such as taxation and lawsuits.

Limited Liability Company (LLC)

It's the chameleon of business entities created by the state statute to work with any type of entity. Solo business owners will be classified as sole proprietorships by default, and for more than one owner, it will be classified as a partnership. However, the business owners can apply to be considered as a corporation.

Corporations

With the corporation type, the business will be an independent entity with its own taxation, stocks, etc. The next step is registering the business and getting the required license and permits, which varies depending on the state where the company will be established and its line of work.  The basic documents needed for registration, according to the Small Business Administration (SBA), are:

• Business name
• Business location
• Employer identification number
• The business legal entity type
• Bank account

Additional requirements vary depending on the business type.

Tip 6: Spread the word about your new organic food business

Advertising is essential for all kinds of businesses, especially new ones.  And good marketing tends to be even more important for organic food businesses, which heavily depend on their unique brand to attract customers.  Fortunately, in the digital age, there are many advertising channels available to adopt in your marketing strategy. It's only a matter of choosing and prioritizing the right ones. 

Social media

With its ease of use and availability, social media has become an essential part of modern life, and it now provides channels to reach the targeted organic food audience wherever they are. However, the most common mistake is using the incorrect channel, so first you should conduct research to determine where the target audience is located.  Are they on Facebook, Instagram, Snapchat, or other social media platforms? Concentrate on the most effective channel then focus lots of resources on building an audience there.

Email Marketing

Emails are a traditional tool that can be very effective depending on the type of organic business. Build an email list by collecting emails from social media, personal meetings, and other sources. Then nurture the relationship with potential customers through regular and motivational emails, such as blogs on healthy living habits and seasonal organic product offers.

Offline Advertising

Although online marketing is important, reaching out to your audience directly through festivals, exhibitions, and so on will increase brand awareness online and offline, as will the positive reviews the local community will share about the business.

Build an e-commerce website

Starting an organic food business website may incur additional costs, but if you can afford it, do it as soon as possible. E-commerce has vastly changed people's purchasing behavior, and many now tend to buy everything online. Failing to provide such an option may result in the loss of many customers.  The most important thing is to work on providing an eye-catching design within the brand guidelines, creating a good user experience for checkout, and working on search engine optimization to ensure that you rank high on the Google search results pages.

4. How to fund an organic food business and manage financials

Financial management is a difficult task for any startup, and many brilliant projects never come to fruition due to a lack of funding.  Starting an organic food business will require funding to cover various expenses, including buying or renting a location, equipment, products, decorations, salaries, and other operational costs. Unfortunately, the operational costs for the organic food industry are expensive and will almost certainly require outside funding. While each niche will have its own set of restrictions and requirements, they all have one thing in common: the need for a solid business plan, which is one of the most common reasons for loan denial .  Once you’re ready with plan in hand, you can then begin to identify which funding options may be right for you, including these:

Traditional loans

Banks can provide organic food businesses with loans but they are usually very limited because the loan will require a proven track record of profitable business, guarantees, and good credit scores. Furthermore, the process necessitates a significant amount of time and documentation, which most startups cannot provide. These kinds of loans are usually repaid in fixed time and monthly installments.

Small Business Administration (SBA)

The SBA provides a governmental guarantee for entrepreneurs and facilitates loaning for the SBA's partners, such as banks. However, it is subject to some constraints. In terms of repayments and interest, it is similar to a traditional loan.

Outside investors

Investors include angel investors and venture capitalists, who aim to invest money in good ideas and successful businesses. With such loans, the investors will provide financial support and professional guidance in exchange for a share of the business equity. In this case, the main job is to be creative and persuasive enough to impress the investors.

Crowdfunding

Crowdfunding is the process of raising money through specialized platforms. Entrepreneurs post funding requests, which include a business description, goals, and how the money will be used. Later, online backers will start supporting the project through donations or preorders to provide enough capital to launch the business.

Online Loans

Online loans are gaining popularity among entrepreneurs as a new type of quick and effective loan for small businesses. They provide an easy-to-apply and fast online application process, and they usually get back to applicants within 24 hours. Moreover, they rely on future business  potential rather than credit card scores, past profits, or losses. ‍

Curious about how to fund your organic food business? Duckfund provides affordable financing for small businesses with higher approval rates, lower interest rates, and easy applications.

• Organic foods contain no genetically modified organisms (GMOs), and no synthetic chemicals are used in manufacturing or processing.
• The organic food industry is growing in the United States and attracting new investors. 
• Starting an organic food business is like starting any other, necessitating hard work and organization.
• Organic foods and relevant businesses are expensive, so outside funding is a good option.

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How to write a business plan for an organic vegetable farm?

Writing a business plan for an organic vegetable farm can be an intimidating task, especially for those just starting.

This in-depth guide is designed to help entrepreneurs like you understand how to create a comprehensive business plan so that you can approach the exercise with method and confidence.

We'll cover: why writing an organic vegetable farm business plan is so important - both when starting up, and when running and growing the business - what information you need to include in your plan, how it should be structured, and what tools you can use to get the job done efficiently.

Let's get started!

In this guide:

Why write a business plan for an organic vegetable farm?

• What information is needed to create a business plan for an organic vegetable farm?
• What goes in the financial forecast for an organic vegetable farm?
• What goes in the written part of an organic vegetable farm business plan?
• What tool can I use to write my organic vegetable farm business plan?

Being clear on the scope and goals of the document will make it easier to understand its structure and content. So before diving into the actual content of the plan, let's have a quick look at the main reasons why you would want to write an organic vegetable farm business plan in the first place.

To have a clear roadmap to grow the business

Small businesses rarely experience a constant and predictable environment. Economic cycles go up and down, while the business landscape is mutating constantly with new regulations, technologies, competitors, and consumer behaviours emerging when we least expect it.

In this dynamic context, it's essential to have a clear roadmap for your organic vegetable farm. Otherwise, you are navigating in the dark which is dangerous given that - as a business owner - your capital is at risk.

That's why crafting a well-thought-out business plan is crucial to ensure the long-term success and sustainability of your venture.

To create an effective business plan, you'll need to take a step-by-step approach. First, you'll have to assess your current position (if you're already in business), and then identify where you'd like your organic vegetable farm to be in the next three to five years.

Once you have a clear destination for your organic vegetable farm, you'll focus on three key areas:

• Resources: you'll determine the human, equipment, and capital resources needed to reach your goals successfully.
• Speed: you'll establish the optimal pace at which your business needs to grow if it is to meet its objectives within the desired timeframe.
• Risks: you'll identify and address potential risks you might encounter along the way.

By going through this process regularly, you'll be able to make informed decisions about resource allocation, paving the way for the long-term success of your business.

To get visibility on future cash flows

If your small organic vegetable farm runs out of cash: it's game over. That's why we often say "cash is king", and it's crucial to have a clear view of your organic vegetable farm's future cash flows.

So, how can you achieve this? It's simple - you need to have an up-to-date financial forecast.

The good news is that your organic vegetable farm business plan already includes a financial forecast (which we'll discuss further in this guide). Your task is to ensure it stays current.

To accomplish this, it's essential to regularly compare your actual financial performance with what was planned in your financial forecast. Based on your business's current trajectory, you can make adjustments to the forecast.

By diligently monitoring your organic vegetable farm's financial health, you'll be able to spot potential financial issues, like unexpected cash shortfalls, early on and take corrective actions. Moreover, this practice will enable you to recognize and capitalize on growth opportunities, such as excess cash flow enabling you to expand to new locations.

To secure financing

Whether you are a startup or an existing business, writing a detailed organic vegetable farm business plan is essential when seeking financing from banks or investors.

This makes sense given what we've just seen: financiers want to ensure you have a clear roadmap and visibility on your future cash flows.

Banks will use the information included in the plan to assess your borrowing capacity (how much debt your business can support) and your ability to repay the loan before deciding whether they will extend credit to your business and on what terms.

Similarly, investors will review your plan carefully to assess if their investment can generate an attractive return on investment.

To do so, they will be looking for evidence that your organic vegetable farm has the potential for healthy growth, profitability, and cash flow generation over time.

Now that you understand why it is important to create a business plan for an organic vegetable farm, let's take a look at what information is needed to create one.

Need a convincing business plan?

The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

Information needed to create a business plan for an organic vegetable farm

Drafting an organic vegetable farm business plan requires research so that you can project sales, investments and cost accurately in your financial forecast, and convince the reader that there is a viable commercial opportunity to be seized.

Below, we'll focus on three critical pieces of information you should gather before starting to write your plan.

Carrying out market research for an organic vegetable farm

As you consider writing your business plan for an organic vegetable farm, conducting market research becomes a vital step to ensure accurate and realistic financial projections.

Market research provides valuable insights into your target customer base, competitors, pricing strategies, and other key factors that can significantly impact the commercial success of your business.

Through this research, you may uncover trends that could influence your organic vegetable farm.

You may discover that organic vegetable farms are becoming more popular with consumers. This trend could result in your farm having an increased demand for organic produce. Additionally, market research may reveal that there could be a growing interest in locally grown produce. This could potentially create an opportunity for you to expand your customer base by marketing your organic vegetables as locally sourced.

Such market trends play a significant role in forecasting revenue, as they offer valuable data about potential customers' spending habits and preferences.

By incorporating these findings into your financial projections, you can present investors with more accurate information, helping them make informed decisions about investing in your organic vegetable farm.

Developing the sales and marketing plan for an organic vegetable farm

As you embark on creating your organic vegetable farm business plan, it is crucial to budget sales and marketing expenses beforehand.

A well-defined sales and marketing plan should include precise projections of the actions required to acquire and retain customers. It will also outline the necessary workforce to execute these initiatives and the budget required for promotions, advertising, and other marketing efforts.

This approach ensures that the appropriate amount of resources is allocated to these activities, aligning with the sales and growth objectives outlined in your business plan.

The staffing and equipment needs of an organic vegetable farm

As you embark on starting or expanding your organic vegetable farm, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is essential for ensuring your business's success.

Both the recruitment and investment plans must align with the timing and level of growth projected in your forecast, and they require appropriate funding.

A vegetable farm might incur staffing costs such as wages for employees, payroll taxes, and insurance. They might also need to cover the cost of equipment such as tractors, harvesting tools, and irrigation systems. Additionally, they may need to invest in organic fertilizers and soil amendments to maintain their organic certification.

To create a realistic financial forecast, you also need to consider other operating expenses associated with the day-to-day running of your business, such as insurance and bookkeeping.

With all the necessary information at hand, you are ready to begin crafting your business plan and developing your financial forecast.

What goes into your organic vegetable farm's financial forecast?

The objective of the financial forecast of your organic vegetable farm's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for an organic vegetable farm are:

• The profit and loss (P&L) statement ,
• The projected balance sheet ,
• The cash flow forecast ,
• And the sources and uses table .

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for an organic vegetable farm shows how much revenue and profit your business is expected to make in the future.

A healthy organic vegetable farm's P&L statement should show:

• Sales growing at (minimum) or above (better) inflation
• Stable (minimum) or expanding (better) profit margins
• A healthy level of net profitability

This will of course depend on the stage of your business: numbers for a startup will look different than for an established organic vegetable farm.

The forecasted balance sheet of your organic vegetable farm

The projected balance sheet of your organic vegetable farm will enable the reader of your business plan to assess the overall financial health of your business.

It shows three elements: assets, liabilities and equity:

• Assets: are productive resources owned by the business, such as equipment, cash, and accounts receivable (money owed by clients).
• Liabilities: are debts owed to creditors, lenders, and other entities, such as accounts payable (money owed to suppliers).
• Equity: includes the sums invested by the shareholders or business owners and the profits and losses accumulated by the business to date (which are called retained earnings). It is a proxy for the value of the owner's stake in the business.

Analysing your organic vegetable farm projected balance sheet provides an understanding of your organic vegetable farm's working capital structure, investment and financing policies.

In particular, the readers of your plan can compare the level of financial debt on the balance sheet to the equity value to measure the level of financial risk (equity doesn't need to be reimbursed, while financial debt must be repaid, making it riskier).

They can also use your balance sheet to assess your organic vegetable farm's liquidity and solvency:

• A liquidity analysis: focuses on whether or not your business has sufficient cash and short-term assets to cover its liabilities due in the next 12 months.
• A solvency analysis: takes and longer view to assess whether or not your business has the capacity to repay its debts over the medium-term.

The projected cash flow statement

A cash flow forecast for an organic vegetable farm shows how much cash the business is projected to generate or consume.

The cash flow statement is divided into 3 main areas:

• The operating cash flow shows how much cash is generated or consumed by the operations (running the business)
• The investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.)
• The financing cash flow shows how much cash is raised or distributed to investors and lenders

Looking at the cash flow forecast helps you to ensure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.

It is also a best practice to include a monthly cash flow statement in the appendices of your organic vegetable farm business plan so that the readers can view the impact of seasonality on your business cash position and generation.

The initial financing plan

The initial financing plan - also called a sources and uses table - is an important tool when starting an organic vegetable farm.

It shows where the money needed to set up the business will come from (sources) and how it will be allocated (uses).

Having this table helps understand what costs are involved in setting up the organic vegetable farm, how the risks are distributed between the shareholders and the lenders, and what will be the starting cash position (which needs to be sufficient to sustain operations until the business breaks even).

Now that the financial forecast of an organic vegetable farm business plan is understood, let's focus on what goes into the written part of the plan.

The written part of an organic vegetable farm business plan

The written part of an organic vegetable farm business plan plays a key role: it lays out the plan of action you intend to execute to seize the commercial opportunity you've identified on the market and provides the context needed for the reader to decide if they believe your plan to be achievable and your financial forecast to be realistic.

The written part of an organic vegetable farm business plan is composed of 7 main sections:

• The executive summary
• The presentation of the company
• The products and services
• The market analysis
• The strategy
• The operations
• The financial plan

Let's go through the content of each section in more detail!

1. The executive summary

The executive summary, the first section of your organic vegetable farm's business plan, serves as an inviting snapshot of your entire plan, leaving readers eager to know more about your business.

To compose an effective executive summary, start with a concise introduction of your business, covering its name, concept, location, history, and unique aspects. Share insights about the services or products you intend to offer and your target customer base.

Subsequently, provide an overview of your organic vegetable farm's addressable market, highlighting current trends and potential growth opportunities.

Then, present a summary of critical financial figures, such as projected revenues, profits, and cash flows.

You should then include a summary of your key financial figures such as projected revenues, profits, and cash flows.

Lastly, address any funding needs in the "ask" section of your executive summary.

2. The presentation of the company

The second section in your organic vegetable farm's business plan should focus on the structure and ownership, location, and management team of the company.

The structure and ownership part provides an overview of the legal structure of the business, who the owners are and how much each has invested and owns. If you are seeking financing it is important that the reader gets a clear picture of which legal entity is receiving the funds, and who controls the business.

The location part should give an overview of the premises from which the company is operating, and why that location is of particular interest (catchment area, accessibility, amenities nearby, etc.).

When describing the location of your organic vegetable farm, you could emphasize its potential to reach a wide customer base. It may be located in an area with good access to major roads and highways, making it easy for customers to make the trip to your farm. Additionally, the location could be in a region with a growing population, allowing you to take advantage of a larger customer base. Furthermore, the region could have a favorable climate for organic vegetable farming, making it a great place for your farm to thrive.

Finally, you should introduce the management team. Explain each member's role, background, and experience.

It is also important to emphasize any past successes that the members of the management team have achieved, and how long they've been working together, as this will help potential lenders or investors understand why they should trust in their leadership.

3. The products and services section

The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers. 

For example, your organic vegetable farm could offer a variety of freshly-harvested produce like leafy greens, root vegetables, and herbs to customers; a weekly vegetable subscription box with a selection of seasonal produce; and a CSA (Community Supported Agriculture) program that allows customers to purchase a share of the farm's harvest. This would offer customers the opportunity to enjoy healthy, locally-sourced organic produce while supporting a sustainable farming practice.

When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.

4. The market analysis

When you present your market analysis in your organic vegetable farm business plan, it's crucial to include detailed information about customers' demographics and segmentation, target market, competition, barriers to entry, and any relevant regulations.

The main objective of this section is to help the reader understand the size and attractiveness of the market while demonstrating your solid understanding of the industry.

Begin with the demographics and segmentation subsection, providing an overview of the addressable market for your organic vegetable farm, the key trends in the marketplace, and introducing different customer segments along with their preferences in terms of purchasing habits and budgets.

Next, focus on your target market, zooming in on the specific customer segments your organic vegetable farm aims to serve and explaining how your products and services fulfil their distinct needs.

For example, your target market might include health-conscious families. These families care deeply about the food they feed their children and seek out organic ingredients when possible. They are likely to purchase organic vegetables in bulk and appreciate the convenience of having their favorite produce delivered to their door.

Then proceed to the competition subsection, where you introduce your main competitors and highlight what sets you apart from them.

Finally, conclude your market analysis with an overview of the key regulations applicable to your organic vegetable farm.

5. The strategy section

When you write the strategy section of your organic vegetable farm business plan, remember to cover key elements such as your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

In the competitive edge subsection, elaborate on what makes your company stand out from competitors. This becomes especially important if you're a startup, aiming to carve a place for yourself amidst established players in the marketplace.

The pricing strategy subsection should demonstrate how you plan to maintain profitability while offering competitive prices to attract customers.

Outline your sales & marketing plan, detailing how you'll reach out to new customers and retain existing ones through loyalty programs or special offers.

For the milestones subsection, outline your company's achievements to date and your main objectives for the future, complete with specific dates to set clear expectations for progress.

Lastly, the risks and mitigants subsection should address the main risks that could affect your plan's execution. Explain the measures you've put in place to minimize these risks, assuring potential investors or lenders.

Your organic vegetable farm may face a variety of risks. One potential risk could be a natural disaster, such as a hurricane or hail storm, which could damage your crops and reduce the amount of produce you are able to harvest. Another risk you could encounter is theft or vandalism of your property or equipment, which could lead to financial losses. In both cases, the risks could have a significant impact on the success of your farm.

6. The operations section

The operations of your organic vegetable farm must be presented in detail in your business plan.

The first thing you should cover in this section is your staffing team, the main roles, and the overall recruitment plan to support the growth expected in your business plan. You should also outline the qualifications and experience necessary to fulfil each role, and how you intend to recruit (using job boards, referrals, or headhunters).

You should then state the operating hours of your organic vegetable farm - so that the reader can check the adequacy of your staffing levels - and any plans for varying opening times during peak season. Additionally, the plan should include details on how you will handle customer queries outside of normal operating hours.

The next part of this section should focus on the key assets and IP required to operate your business. If you depend on any licenses or trademarks, physical structures (equipment or property) or lease agreements, these should all go in there.

You may have key assets such as land and equipment that could be considered intellectual property. Additionally, the farm may have special recipes or techniques for preparing organic vegetables that could be considered intellectual property. These may be closely guarded secrets that could give the farm a competitive advantage.

Finally, you should include a list of suppliers that you plan to work with and a breakdown of their services and main commercial terms (price, payment terms, contract duration, etc.). Investors are always keen to know if there is a particular reason why you have chosen to work with a specific supplier (higher-quality products or past relationships for example).

7. The presentation of the financial plan

The financial plan section is where we will present the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of what goes in your organic vegetable farm business plan, let's look at the solutions you can use to draft yours.

What tool should I use to write my organic vegetable farm's business plan?

There are two main ways of creating your organic vegetable farm business plan:

• Using specialized business planning software,
• Hiring a business plan writer.

Using an online business plan software for your organic vegetable farm's business plan

Using online business planning software is the most efficient and modern way to write an organic vegetable farm business plan.

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

Hiring a business plan writer to write your organic vegetable farm's business plan

Outsourcing your organic vegetable farm business plan to a business plan writer can also be a viable option.

Business plan writers are experienced in writing business plans and adept at creating financial forecasts without errors. Furthermore, hiring a consultant can save you time and allow you to focus on the day-to-day operations of your business.

However, hiring business plan writers is expensive as you are paying for the software used by the consultant, plus their time, and their profit margin of course.

From experience, you need to budget at least £1.5k ($2.0k) excluding tax for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with lenders or investors).

You also need to be careful when seeking investment. Investors want their money to be used to grow the business, not spent on consulting fees. Therefore, the amount you spend on business plan writing services (and other consulting services such as legal services) needs to be negligible relative to the amount raised.

The other drawback is that you usually don't own the business plan itself: you just get the output, while the actual document is saved in the consultant's business plan software - which makes it difficult to maintain the document up to date without hiring the consultant on a retainer.

For these reasons, outsourcing the organic vegetable farm business plan to a business plan writer should be considered carefully, weighing both the advantages and disadvantages of hiring outside help.

Ultimately, it may be the right decision for some businesses, while others may find it beneficial to write their business plan using online software.

Why not create your organic vegetable farm's business plan using Word or Excel?

I must advise against using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write your organic vegetable farm business plan. Let me explain why.

Firstly, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is highly technical and requires a strong grasp of accounting principles and financial modelling skills. It is, therefore, unlikely that anyone will fully trust your numbers unless you have both a degree in finance and accounting and significant financial modelling experience, like us at The Business Plan Shop.

Secondly, relying on spreadsheets is inefficient. While it may have been the only option in the past, technology has advanced significantly, and software can now perform these tasks much faster and with greater accuracy. With the rise of AI, software can even help us detect mistakes in forecasts and analyze the numbers for better decision-making.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Moreover, software makes it easier to compare actuals versus forecasts and maintain up-to-date forecasts to keep visibility on future cash flows, as we discussed earlier in this guide. This task is cumbersome when using spreadsheets.

Now, let's talk about the written part of your organic vegetable farm business plan. While it may be less error-prone, using software can bring tremendous gains in productivity. Word processors, for example, lack instructions and examples for each part of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they don't handle formatting for you.

Overall, while Word or Excel may seem viable for some entrepreneurs to create a business plan, it's by far becoming an antiquated way of doing things.

• Having an up-to-date business plan is key to maintaining visibility on your future cash flows.
• A business plan has 2 parts: a financial forecast highlighting the expected growth, profitability and cash generation of the business; and a written part which provides the context needed to interpret and assess the quality of the forecast.
• Using business plan software is the modern way of writing and maintaining business plans.

We hope that this guide helped you to better understand how to write the business plan for an organic vegetable farm. If you still have questions, do not hesitate to contact us.

Also on The Business Plan Shop

• How to write a 5 years business plan
• How investors analyse business plan
• Executive summary in a business plan
• What is a business plan?
• Business plan myths

Know someone who owns or wants to start an organic vegetable farm? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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The Organic System Plan

What you need to know about creating an organic system plan.

To apply for organic certification, you must create an Organic System Plan (OSP ), which describes how your farming, handling and/or processing practices meet organic standards. The OSP should clearly explain your operating plan, including information on crops, animals, harvests, sales, records, soil-building practices, pest management, health care, pasture, and any other practices related to organic production.

Organic records include:

• Materials list outlining all substances used during the production of organic crops and livestock, including composts, fertilizers, insecticides, fungicides, health-care products, and feed.
• A map of all farmlands and production areas, illustrating how organic products are protected from contact with non-organically managed land.
• Complete field history for growing areas and pastures used in organic production, which includes plot size, crops, and any substances that have been used.
• Biodiversity plan outlining natural resource conservation.

Once completed, producers and handlers will send the OSP to a certifier as a part of their certification application.

• Access free training in the NOP Organic Integrity Learning Center , like the “NOP-150 Organic System Plans” course.
• Download sample OSP templates

Download the Guide for Organic Crop Producers (pdf) for more detailed guidance

OSPs for Split Operations, Livestock Producers, and Handlers/Processors

Split operations.

Many transitioning producers choose to convert only a portion of their land to organic production, while continuing to use conventional practices on other plots. This is known as a “split operation” and allows producers to begin raising organic products gradually. Producers may choose to transition to a fully organic operation over time or maintain split operations indefinitely.

When completing an OSP, split operations:

• Must document any way that organic products might mix or come in contact with non-organic products or prohibited substances.
• May need to provide information on both conventional and organic activities so that certifiers and inspectors can make sure the products are separated.

Download the Guide for Organic Crop Producers (pdf)   for more detailed guidance

Livestock Producers

Organic livestock producers must also follow organic guidelines for growing organic pasture and feed, as well as raising organic animals. Guidelines include the following:

• Generally, organic livestock must be raised organically from at least the third trimester of gestation.
• Birds used for poultry or egg production, may come from any source, but must be raised organically beginning the second day of life.
• Dairy animals must be raised organically for at least one year before their milk and milk products can be sold as organic.
• Organic livestock may only eat certified organic feed.
• Any pastures, forages, and plant-based bedding (such as hay) that livestock use or eat must be certified organic.
• Ruminant animals (cattle, sheep, and goats) must spend at least one-third of the year on pasture.

Download the Guide for Organic Livestock Producers (pdf)   for more detailed guidance

Handlers and Processors

Since their operations don’t use land for production, organic handlers and processors do not have a three-year transition. However, they must still complete an OSP that describes their handling and processing activities, including information about the type of business, ingredient purchases, transportation of raw ingredients, storage, cleaning and sanitation, processing, pest management, sales, and records.

The OSP for handlers should also include the following items:

• Flowchart that shows the movement of organic products from the time they are received at the facility to the time they are sold as finished products
• Facility map with enough detail to show the inspector where processing equipment is located
• Product profile for each individual product that lists all ingredients and processing aids used and the suppliers from which they were obtained
• Organic certificates from each supplier that verify ingredients are in fact organic
• Labels for each organic product produced
• List of materials used on food-contact surfaces, including cleansers and sanitizers
• List of substances used during or after products are washed

Download the Guide for Organic Processors (pdf)   for more detailed guidance

Other Helpful Resources

• Transitioning to Organic
• Becoming a Certified Operation
• Learn about conservation programs  
• NOP Organic Integrity Learning Center

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Organic Farm Business Plan Example

Nov.11, 2016

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Table of Content

The demand for healthy and nutritious foods is at an all-time high across the globe. The realization that most of the lifestyle-related diseases are caused by consumption of foods that are contaminated with harmful chemicals is one of the main reasons why most people are inclined to organically grown foods.

You can contribute positively to the health and wellness of millions of individuals from all across the globe by starting an organic farm. Before you do that, you need to have an organic farm business plan to guide you as you start planting the various crops.

OGS Capital, an internationally accredited company that offers business plan writing services , can write the plan and help you implement the recommendations. Over the many years that we have been in plan of a business , we have helped thousands of farmers set up organic farms across the globe. Therefore, you can be sure that you will get value for money.

Benefits of Starting an Organic Farm

Knowing the specific benefits of running an organic farm will help motivate you to venture into the industry even more. Here are three primary benefits of starting an organic farm.

• Provides healthy food products that promote wellness
• Contributes positively to environment conservation
• Helps alienate food insecurity in the world

Let us take another bold step and discuss these benefits in-depth. Note that all this information will be included in your organic farming business plan to show your understanding of this form of agriculture.

Promotes Environmental Wellness

The conventional farming techniques entail the use of chemicals such as fertilizers and other farm inputs in a bid to promote maximum growth of the crops. The main reason for doing this is to ensure that farmers get a high return on their investment. Unknown to them is that their actions have harsh repercussions on the environment.

For instance, some of the chemicals used to make artificial fertilizers infiltrate deep into the soil, and this results in soil pollution. Over time, the chemicals are pushed further down to the underground water reservoirs. Use of such water for domestic purposes can lead to cancers and other serious health issues. The team of writers and agriculture experts who offer farming business plan services in our farm will provide clear guidelines on how the organic farm will prevent such occurrences and instead promote environmental conservation.

Provide Healthy Food Products

The farm business plan is not considered complete and viable if it does not give details about the quality and health standards of the agricultural produce. Even though organically grown foods are perceived to be healthy, it is important to put in place quality control measures to ensure that consumers get nothing but the best farm products in the market.

Our team will help you come up with a way of monitoring the quality of your products. Thanks to technological advancements, there is modern equipment that you can use to check each product before transporting it to the market. By applying the recommendations, you will be able to monitor the quality of your products. Customers will also gravitate to your store resulting in high returns.

Alienate Food Insecurity

It is disheartening to note that millions of people from all across the globe sleep hungry or have limited access to quality food. Climate change, global warming, and lack of enough resources to do farming are three primary reasons for food insecurity, especially in the developing countries. The government in the affected countries need to sensitize the masses about organic farming as well as offer incentives to resolve this problem.

Establishing an organic farm will increase food availability not only locally but also an international level. For instance, you can decide to ship some of the produce to affected parts of the world. Our team will carry out intensive research on the degree of food insecurity in the world and articulate the facts in the business plan. This information will further motivate investors and banks to support your great incentive.

If you are looking for an expert writer who specializes in offering farm business plan UK services, get in touch with us today. We are a team of professional writers who have teamed up to help entrepreneurs like you to start businesses successfully by offering excellent farm buisness plan services.

One of the most important aspects that make us special is our commitment and determination. We are also keen on embracing technology as evident from the analytical tools that we use to collect and analyze data. Once you fill the contact us form and hit the “submit” button, the message will be relayed to our team and will be acted upon immediately.

Download Organic Farm Business Plan Sample in pdf

OGScapital writer specializes in business plan themes such as Christmas tree farm business plan , organic fertilizer business plan , fish farm business plan , hydroponics farm business plan , lawn care business plan , benefits of business continuity planning and etc.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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How To Start An Organic Farming Business – Complete Guide

• February 23, 2024
• by Next What Business Research Team

Organic farming has grown in popularity in recent years as people become more concerned with their health and the environment. With rising demand for organic goods, establishing an organic farming business in India might be a profitable investment. This detailed guide will coach you through the necessary procedures for establishing and operating a profitable organic farming business in India.

Organic farming was normally done on small, family-run farms. However since the demand for organically grown food products is now increasing, more and more people in India are investing in land for organic farming.

Organic farming is friendlier to the environment and is more sustainable compared to newer farming techniques. So, not only you can make huge profits from organic farming, but it also helps to protect the environment and the planet as a whole.

With the increase in awareness of the multiple health risks of foods grown with chemicals, more and more people are turning away from food products grown with fertilizers and other chemicals toward organically grown food.

What is Organic Farming?

Organic farming is an agricultural method that focuses on cultivating crops and raising livestock in a manner that emphasizes environmental sustainability, biodiversity, and the use of natural inputs. It aims to produce food in harmony with nature, avoiding synthetic chemicals, pesticides, genetically modified organisms (GMOs), and artificial additives.

Read:   How to Start an Organic Food Store Business

Some of the important practices of organic farming are listed below:

⇒ Natural Inputs

Organic farmers rely on natural sources of nutrients and inputs, such as compost, animal manure, crop rotation, green manure, and beneficial insects, to nourish the soil and plants.

⇒ Soil Health

Soil health is prioritized through practices like crop rotation, cover cropping, and minimal tillage to improve soil structure, fertility, and microbial activity.

⇒ Pest and Disease Management

Organic farmers employ methods such as companion planting, biological pest control, trap cropping, and natural predators to manage pests and diseases without the use of synthetic pesticides.

⇒ Biodiversity

Organic farming encourages biodiversity by preserving native plants, supporting natural habitats for wildlife, and maintaining diverse crop varieties to enhance ecosystem resilience and reduce dependence on chemical inputs.

⇒ Animal Welfare

In organic livestock farming, animals are raised in conditions that prioritize their well-being, including access to outdoor grazing, organic feed, clean water, and humane treatment.

⇒ Certification

Organic farming practices are regulated and certified by authorized agencies to ensure compliance with organic standards and regulations. Organic certification verifies that the farm follows established organic principles and guidelines.

11 Steps to Start an Organic Farming Business 

1. learn more about the organic farming business.

Your first step toward starting an organic farm is to find out more about the business to have a better understanding of how things work. Running a small farm in your yard is different from running a bigger organic farm. So, you need to understand the extra input required to farm organically on a commercial scale.

A good way to start is to contact the owner or manager of an established organic farm. Tell them about your intent to start your own organic farm and greenhouse business. Then ask important questions about the business, starting from questions on how to get started to those on how to manage the business successfully after launch.

Learning more about the business will help you understand and avoid the pitfalls and challenges you are likely to encounter as you start your own organic farm business.

2. Determine the Type of Crops to Grow

Chances are that you don’t have enough land to grow a wide range of crops. Even if you do, you still need to specify the type of crops you will grow on your farm. These could be flowers, vegetables, food crops, herbs, or other plants.

Don’t just choose any crop or produce out of personal preference. Conduct market research to learn what produce is popular in your area. That is, figure out what farm produce sells well. You don’t want to invest your time, energy, and effort into growing produce that nobody in your locality wants to buy.

Find out what other farmers in your locality are growing on their farms. This will give you an idea of what consumers in your locality are buying. Defining which specific farm produce you will grow will also help you better prepare your land for it.

3. Conduct Market Research

Before diving into organic farming, conduct thorough market research to understand the demand for organic products in your target market. Identify potential customers, distribution channels, and competitors in the organic farming sector.

4. Develop a Business Plan

A business plan may not necessarily guarantee the success of your organic farm and greenhouse business, but it will significantly boost its chances of success. Your business plan will serve as a step-by-step guide to setting up your business successfully and running it effectively afterwards. It will also help you understand if there’s a market in your locality for organic food products.

You need to outline your business goals, target market, production techniques, marketing strategies, and financial projections in a well-defined business plan. A comprehensive business plan will serve as a roadmap for your organic farming venture and help secure funding from investors or financial institutions.

5. Choose the Right Location

Select a suitable location for your organic farm based on factors such as soil quality, climate, water availability, and proximity to markets. Ensure that the land is free from chemical contamination and has sufficient access to sunlight and water sources.

6. Obtain Necessary Licenses and Permits

Acquire the required licenses and permits for organic farming from relevant government authorities. These may include organic certification from accredited agencies, agricultural land lease or ownership documents, and permits for water usage and land development.

7. Arrange Funds

Securing adequate funding is crucial for launching and sustaining your organic farming business. Consider the following options to arrange funds for your venture:

• Bank Loans: Approach banks and financial institutions for agricultural loans or credit facilities specifically designed for organic farming initiatives. Provide a detailed business plan and collateral to secure the loan.
• Government Schemes: Explore government-sponsored schemes and organic farm subsidies available for organic farming in India. Many state and central government programs offer financial assistance, subsidies on organic inputs, and grants for organic certification.
• Investors and Partnerships: Seek investment from private investors, venture capitalists, or angel investors interested in sustainable agriculture and organic food production. Consider forming partnerships with like-minded individuals or organizations to share resources and expertise.
• Crowdfunding: Launch a crowdfunding campaign on online platforms to raise funds from individuals passionate about organic farming and sustainable agriculture. Offer rewards or incentives to attract donors to your cause.

Read :  Organic Farming Subsidy For Indian Entrepreneurs

8. Get Organic Certifications

Obtain organic certification for your farm from recognized certification bodies such as the National Programme for Organic Production (NPOP) or Participatory Guarantee System (PGS). Organic certification assures customers that your products meet stringent organic standards and command premium prices in the market.

9. Marketing and Distribution

Develop a marketing strategy to promote your organic products through various channels such as farmer’s markets, organic food stores, online platforms, and direct sales to consumers. Highlight the health and environmental benefits of organic farming to attract conscious consumers.

10. Build Partnerships

Collaborate with local organic farming associations, cooperatives, and retailers to expand your market reach and access to distribution networks. Establish partnerships with restaurants, cafes, and health food stores to supply organic produce directly to consumers.

11. Financial Management

Maintain meticulous records of your organic farming operations, including expenses, revenues, and yields. Monitor your financial performance regularly and identify areas for cost optimization and revenue enhancement. Explore government subsidies and financial assistance schemes available for organic farming initiatives in India.

Frequently Asked Questions

What is the cost of starting an organic farming business.

The investment will depend on the level of equipment and automation you employ on the farm. However, you should be prepared with an investment in the range of 1 Lac to 3 Lac Rupees per acre of organic farming land. In addition, there will be the cost of distribution and marketing of the produce.

Is organic farming profitable in India?

Organic farming can be profitable in India, especially with increasing consumer awareness and demand for organic products. However, profitability depends on factors such as crop selection, market demand, input costs, yield potential, and effective marketing strategies.

Why should I start an organic farming business?

Starting an organic farming business allows you to produce food in harmony with nature, promote environmental sustainability, provide healthier food options, contribute to biodiversity conservation, and meet the growing demand for organic products.

What types of crops can I grow in organic farming?

You can grow a wide range of crops organically, including fruits, vegetables, grains, pulses, herbs, spices, and medicinal plants. The choice of crops depends on factors such as soil type, climate, market demand, and your preferences.

Do I need special training or certification to start an organic farming business?

While formal training in organic farming practices is beneficial, it’s not mandatory. However, obtaining organic certification from authorized agencies is essential if you plan to sell your products as certified organic. Certification ensures compliance with organic standards and regulations.

How do I arrange funds to start an organic farming business?

You can explore various funding options such as personal savings, loans from banks or financial institutions, government schemes and subsidies for organic farming, grants from agricultural organizations, crowdfunding, and partnerships with investors or stakeholders.

What are the challenges of organic farming in India?

Challenges of organic farming in India include limited access to organic inputs and resources, pest and disease management without synthetic pesticides, higher labour requirements for weed control and soil management, marketing and distribution challenges, and certification costs.

How do I market organic products from my farm?

You can market your organic products through various channels such as local farmers’ markets, organic food stores, online platforms, community-supported agriculture (CSA) programs, direct sales to restaurants and retailers, and participation in organic trade fairs and exhibitions. Developing a strong brand identity and communicating your farm’s organic practices can also help attract customers.

Are there government schemes or subsidies available for organic farming in India?

Yes, the Indian government offers several schemes and subsidies to promote organic farming, including financial assistance for organic certification, organic farming training programs, subsidies on organic inputs, infrastructure development, and marketing support through organic farming clusters and cooperatives.

The Editorial Staffs at NextWhatBusiness is a team of Business Consultants with years of experience in small and medium-scale manufacturing and service-based businesses.

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Free Agriculture Sample Business Plan PDF + How to Write

Elon Glucklich

6 min. read

Updated February 7, 2024

Free Download:  Agriculture Business Plan Template

As a farmer, you’re in the business of putting food on the table. Agriculture is one of the world’s oldest professions.

Today it accounts for over 5% of U.S. Gross Domestic Product, and 1 in 10 American workers are in agriculture, food, and related industries.

But starting a new agriculture business requires intensive planning and upfront preparation. If you’re looking for a free, downloadable agriculture sample business plan PDF to help you create a business plan of your own, look no further.

Keep in mind that you don’t need to find a sample business plan that exactly matches your farm. Whether you’re launching a larger agricultural business outside a bustling city or a smaller organic operation, the details will be different, but the foundation of the plan will be the same. 

Are you writing a business plan for your farm because you’re seeking a loan? Is your primary concern outlining a clear path for sales growth? Either way, you’re going to want to edit and customize it so it fits your particular farm. 

No two agriculture farming businesses are alike.

For example, your strategy will be very different if you’re a dairy operation instead of a soybean farm. So take the time to create your own financial forecasts and do enough market research for your specific type of agriculture so you have a solid plan for success. 

• What should you include in an agriculture farm business plan?

Your agriculture business plan doesn’t need to be hundreds of pages—keep it as short and focused as you can. You’ll probably want to include each of these sections: 

1. Executive summary

An overview of your agriculture business, with a brief description of your products or services, your legal structure, and a snapshot of your future plans. While it’s the first part of the plan, it’s often easier to write your executive summary last.

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2. Business summary and funding needs

Details about your farming operation, including how much capital you will need and the types of funding you’re considering. Include your business history, your current state, and your future projections. It should also cover your business location, the equipment and facilities needed, and the kinds of crops or livestock you plan to raise.

3. Products and services

Provide details on the types of crops, farming methods, and any value-added products you plan to offer, such as finished goods or even  agritourism offerings .

4. Marketing plan

Compile your market research findings, including the demand for your products or services, your target customers , and your competitors. It should also outline your marketing strategy—how you plan to attract and retain customers. 

5. Financial plan

Your revenue projections, cost estimates, and break-even analysis. Your financial plan and forecasts should demonstrate that your business has a path to profitability.

• Building on your farm business plan sample

With a free agriculture business plan template as your starting point, you can start chipping away at the unique elements of your business plan.

As the business owner, only you can speak to aspects of your agriculture operation like your mission and core values.

You’re putting in the long hours to start a thriving farm business, so aspects of your mission – like a commitment to sustainable farming practices – will be best explained in your own words. Authenticity will help you connect with a growing market of consumers who value transparency and environmental stewardship in their food sources.

As for more conventional aspects of business planning , you will want to take on things like your marketing and financial plans one at a time. Here are a few specific areas to focus on when writing your business plan.

Invest time in market research

Starting an agriculture operation requires significant startup costs. When you throw in the unique land use considerations involved, it’s crucial to conduct thorough market research before investing hundreds of thousands – or even millions – of dollars into a farm business.

Start by researching the types of farms operating in your locality and wider region, and the specific crops or livestock they specialize in. You will need to understand seasonal trends, including crop yields and livestock productivity.

Note the demographics of the local community to understand their buying habits and preference for local produce. Also, be aware of the competitive landscape and how your farm can differentiate itself from others. All of this information will inform your service, pricing, marketing, and partnership strategy.

From there, you can outline how you plan to reach your target market and promote your farm’s offerings.

Craft your agriculture go-to-market strategy

One of the things that makes an agriculture farm business plan different from some service-based business plans is that you might decide to work only with one or two businesses that purchase your goods.  

You may offer different tiers of products to different types of buyers, such as produce for an organic farmers market, and corn for another farm’s animal feed. If that’s the case, make sure you include ideas like setting aside land for organic growth and maintenance.

Discuss your advertising and promotional strategies, emphasizing channels relevant to your target market. Also, consider how partnerships with local businesses, farmers’ markets, and other industry stakeholders can enhance your visibility.

Include your pricing strategy and any special promotions or loyalty programs. Also, consider public relations and media outreach efforts that can raise awareness about your farm and its sustainable practices.

Prepare for unique farming challenges

Running an agricultural business comes with its own set of challenges, including weather-related disruptions and market volatility. Your business plan should identify these potential risks and present contingency plans to address them.

Include a plan to mitigate weather-related risks, such as crop diversification, employing weather-resistant farming practices, investing in appropriate infrastructure like greenhouses or drainage systems, or taking out insurance to cover weather-related losses.

Detail the operational aspects of your business , including land ownership, employee status, farm maintenance, and safety requirements. Also, illustrate your strategies for managing crop production, livestock care, land stewardship, and regulatory compliance.

Plan for the future

Contingency planning is important in all businesses.

But the unique challenges in agriculture of changing market dynamics, regulatory changes, and climate impacts make it especially necessary to plan for the future. Detail how you’ll measure success, and how you will be prepared to adapt your offerings if you need to change the focus of the business due to factors outside your control.

Also, be ready to discuss opportunities for scaling your business over time, such as introducing new crops, expanding farm operations, or opening additional locations.

• Get started with your farm business plan sample

There are obviously plenty of reasons farm owners can benefit from writing a business plan — for example, you’ll need one if you’re seeking a loan or investment. Even if you’re not seeking funding, the process of thinking through every aspect of your business will help you make sure you’re not overlooking anything critical as you grow.

Download this  agriculture farm sample business plan PDF  for free right now, or visit  Bplans’ gallery of more than 550 sample business plans  if you’re looking for more options.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.

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• Organic Farm Business Plan

Article Index:

2.0 Company Description

3.0 products, 4.0 market analysis, 5.0 marketing strategy and implementation, 6.0 organization and management, 7.0 financial plan, 1.0 executive summary.

Once the humble family vegetable garden, Franks Organic Farm is today a one acre working farm with over 30 varieties of vegetables. When Frank Burns was laid off from his corporate position three years ago, he first he turned to the vegetable garden for money saving / economic reasons. But with the uncertainty of recent events in the Middle East, the energy crisis, the long term effects of reliance on fossil fuels, and his personal philosophies on conservation, Frank Burns and his wife Kathy, turned this family vegetable patch into a thriving certified organic produce business.

Franks Organic Farm is based on the sound principles of conserving natural resources, limiting the carbon footprint, growing, hiring and eating locally grown and prepared foods, and making the world a better place to live in. This unique perspective clearly shows in the quality of the produce, the well cared for gardens, and natural friendliness and ease of its owners.

Franks Organic Farm was created to meet the growing needs of a community that shares these same views and is concerned about what they eat and feed their children. This is a community that is tired of ‘fresh’ tomatoes bought at the local grocery store. When more than likely the “fresh” tomatoes were picked while still unripe, shipped 3,000 miles over several days/weeks, and then artificially “ripened” using ethylene gas, thus robbing it of practically all of its nutritional value.

Franks Organic Farm is a Community Supported Agriculture (“CSA”) Business entity. CSA is both a marketing strategy and a philosophy. The farmers sell shares (subscriptions) in the next season’s produce, usually before the season begins. Each week of the season, the member receives a ‘share’ of produce from the farm. In some cases the members are involved in decision-making of all aspects of the operation; in others the farmer makes all the decisions. Each CSA is as unique to the farmer and the community it serves. Members may pick up their boxes at the farm, at delivery sites, or home delivery may be offered.

The purpose of this business plan is to provide a blueprint for near term and long term goals. The business plan will be utilized as a tool to gauge how well the farm is doing in the future compared to their initial goals and keep them on target. The business plan is also a tool for lenders, explaining the need for initial financing, the source and use of funds, and debt repayment capabilities.

1.1 Business Objectives

Franks Organic Farm has simple objectives: provide healthy and delicious tasting vegetables while simultaneously leaving a minimal carbon footprint. In order to accomplish this, the farm plans to:

• Sell 60 shares by Year 2 and have full-time income or 90 shares sold by Year 3.
• In Year 4, Franks Organic Farm plans to purchase an additional 9 acres for a total of 12 acres. The initial 3 years of operations will provide the excellent credit history and track record necessary for this large purchase.

1.2 Mission Statement

Franks Organic Farm’s mission is to raise the best tasting and finest quality fruits and vegetables for the local community. Franks Organic Farm uses only natural and sustainable farming methods, free from pesticides or fertilizers. Natural foods and natural farming methods leaves a smaller carbon footprint while simultaneously improves the health of its customers and its local community.

1.3 Guiding Principles

Franks Organic Farm’s slogan is simple: “Live life simply and simply live”. The owners also believe in contributing to their community and the planet by:

1. Local Franks Organic Farm believes that in order for the survival of the planet, we must rely on local resources. Buying from local farmers supports the local economy.

2. Sustainable Living By reducing reliance on energy is better for the planet and conserves our natural resources.

3. Satisfied Customers Happy members ensure repeat business and their referrals grow the business.

1.4 Keys to Success

Below are a Franks Organic Farm’s Keys to Success:

• Superlative Communication  – Franks Organic Farm keeps its members current on all aspects of the farm – through its weekly newsletters and blog updates on what is happening during the winter months such as new and exciting vegetable offerings being planted in the greenhouse. Additionally, Franks Organic Farm encourages member feedback and input and has its members complete surveys and questionnaires regarding how the farm is doing and what can be done to improve operations.
• Healthier Food Choices  – All vegetables are USDA certified organic. The vegetables are pesticide free and chemical free and no preservatives are used.
• Support the Local Economy – Statistically more than 70 percent of the local food supply is grown outside the state. Buying from Franks Organic Farm ensures that its members buy locally and creates jobs that support the local market.
• Offer Personalized Selections  – Franks Organic Farm strives to be the leading CSA farm supplier of choice by providing customized offerings to its members. If, say a member wants a cucuzzi fruit – Franks Organic Farm will grow this item if the soil and temperatures can accommodate this item. By providing foods the customers want (and will actually eat) cuts down on waste and makes the planet a better place for everyone.
• Home Delivery  – Franks Organic Farm will establish weekly delivery times that are convenient for its customers. This saves customers time and gas money – making everyone happy. Alternatively customers will also have the option to pick up directly at the farm.

Frank and Kathy Burns run, manage, and operate Franks Organic Farm. The company initially sold farm to market then quickly began supporting local restaurants with surplus (waste) sold at the local farmers market. Frank and Kathy are operating the business as a CSA, a business for the first time this year.

The Burns selected the CSA model, in which both the farmer and the members have a mutual interest in the crop. And because the shares are essentially presold prior to planting, the ‘waste’ factor (or excess crops risk) are eliminated. Based on their success at the farmer’s market and local restaurants, the Burns have already sold 100 percent of their 30 shares.

Franks Organic Farm is located on one of three acres located at the Burns’ primary residence in Plymouth, Wisconsin. During the off season, the owners of Franks Organic Farm will actively target and market new members, engage in public speaking events, and complete their forthcoming E Books.

2.1 Ownership

Franks Organic Farm is a C-Corporation formed in the State of Wisconsin and is wholly owned by Frank and Kathy Burns.

Frank Burns, a former Human Resources Director at Sargento Cheese, was recently downsized. Not desiring to re-enter corporate America, and concerned about the environment, global issues and the state of the economy, Frank began expanding his family garden. What began as a way for the family to save some money and reduce the carbon foot print, today has grown from its small ¼ acre plot to over 1+ acre with plans for expansion to 12+ acres. A shrewd businessman and well known in the community, Frank initially approached colleagues and friends in the local restaurant community. These connections marked the beginning of business for the startup farm and as word of mouth spread, Franks Organic Farm attracted ten other additional restaurants. All surplus was sold at the local farmer’s market.

Kathy Burns is an elementary school teacher for the Sheboygan Area School District. A graduate of Marquette University in Milwaukee, Kathy has been teaching fifth grade Science for over ten years. Raised on a family dairy farm, Kathy’s family also had a small fruit and vegetable farm and she loved helping the family grow and harvest the crop. Mrs. Burn’s summer schedule is flexible and helps the family maintain the garden during the busy summer growth season.

2.2 Legal Form

Franks Organic Farm is C-Corporation formed in the State of Wisconsin. The entity is wholly owned by Frank and Kathy Burns.

2.3 Start-Up Summary

The Burns have been managing the family farm successfully for the last fifteen years. Recently the owners installed a greenhouse with warming lights for early starts. They also invested in a pickup truck (2005 Ford F150) for delivering vegetables to the members. Most recently they purchased a tractor and borrowed their neighbor’s attachments as needed for harvest.

Last year, Franks Organic Farm passed the stringent requirements needed to qualify as certified organic as deemed by the USDA. This allows them to market all produce as organic and can also bring higher margins when surplus produce is sold outside the CSA or to restaurants or market stands. The Burns realized that although consumers may not understand all the requirements associated with the organic label (such as pesticide control and fertilizers), the consumer is comfortable with the label. This, is one of the keys, they believe which will set Franks Organic Farm apart from its peers.

All pre-harvest and harvest supplies have been paid for out-of-pocket. The owners have already spent in excess of $40,000 to start their farm business.

When the owners announced they were becoming a CSA, the news traveled fast and demand for their products was so great that they have already presold 100 percent of their shares for the upcoming growing season. In order to meet these demands and meet the opportunity for growth, the owners are seeking an operating loan from the USDA’s Farm Service Agency, Insurance Company or private investor.

The credit facility will be used to meet operating and cash flow needs for the pre harvest and harvest season. The $14,500 credit facility will be secured by a first lien position on the 3 acre plot of land, all buildings and improvements (a greenhouse). The land is valued at $30,000 and is currently owned free and clear by the Burns. The land is adjacent to the Burn’s primary residence.

2.4 Location and Facilities

Franks Organic Farm is located in Plymouth, Wisconsin, located in Sheboygan County Wisconsin. Sheboygan County is located in east-central Wisconsin. Sheboygan County is a one-hour drive to Milwaukee and Green Bay, and less than a 3 hour trip Chicago. Interstate 43 and State Highways 23 and 57 make are the main highways.

Sheboygan County’s population is 117,566. It has grown 4.4 percent between 2000 and 2009. The County is expected to continue to grow by a similar rate until 2015 when it reaches a population of 123,209. Major employers include: Kohler Company, Bemis Manufacturing, Aurora Health Care, Johnsonville Sausage, Rockline Industries, and Sargento Foods. The City of Plymouth is located in west-central Sheboygan County along State Highways 23, 57, and 67. It is the second largest municipality in Sheboygan County and one of the fastest growing in the County. (Sheboygan County Economic Development Corporation).

3.1 Products/Services Descriptions

Franks Organic Farm’s growing season will start in early May and end in October with the goal of 20 weeks. Shares will be comprised approximately 10-15 different crops every 8 weeks of in-season produce. Here is an example of types of produce throughout the season:

Spring: Beets, Broccoli, Cabbage, Carrots, Garlic, Green Onions, Kale, Lettuce (several varieties), Radishes, Peas, Spinach.

Summer: Beans, Carrots, Cucumbers, Eggplant, Green Onions, Leeks, Melons, Onions, Sweet Peppers, Summer Squash, Tomatoes, Zucchini.

Fall: Beans, Beets, Broccoli, Cauliflower, Cucumbers, Chard, Lettuce (several varieties), Potatoes, Red Onions, Spinach, Winter Squash.

All share sales are sold in advance.

A Full Share will provide a family of four vegetables for a week. (estimate). Likewise, a Half Share provides a week of vegetables for two people. Full Shares are $750 and Half Shares are $375 for the season. (The owners are currently only considering the sale of Full Shares at this time).

The Burns will utilize a detailed planting schedule which historically has helped immensely especially in the hectic summer planting season. The detailed guide begins with the plantings that tolerate the coldest spring and these are started in their greenhouse. Summer crops will be shaded with cloths if necessary (like spinach for instance). The farmers will plant many tomatoes (which are very popular) and only some eggplant which is less popular. Other considerations that are detailed in the planting calendar will be the amount of produce that is needed. One way to plant more is to plant smaller amounts more often. Examples include broccoli, carrots, scallions, and summer squash. The Burns have learned that planting these items two or three times during the growing season yields more crop and the surplus can readily be sold at the farmers market. Picking peas is difficult at harvest time, so the Burns always plan to plant surplus to make harvest time worthwhile. It is expected that any surplus can be sold at the farmers market.

3.2 Competitive Comparison

Plymouth, Wisconsin, reports six CSA entities, of which three represent direct competition for the subject.

3.3 Product/Service Sourcing

All produce will be grown on Franks Organic Farm. Frank and Kathy Burns will both actively work and manage the farm.

Distribution At Franks Organic Farm, members have the option for home delivery or to travel to the farm on the scheduled pickup day.

The home delivery choice is what most members prefer and allows the Burns to deliver the farm fresh produce directly. This distribution method has the least carbon footprint, with one driver and one truck. It is obviously the most intensive for the Burns and with busy summer season, this can be too time consuming for them. Items are delivered in reusable boxes. This distribution method represents any easy way to deal with any shortfalls in produce the Burns will simply ‘mix and match’ items for the members.

Alternatively, the members have the option to pick up the produce directly at the farm. The Burns enjoy this option especially during the busy season, because it frees up some of their time. This option requires that the driveway be easily accessible to the members and that the farm appears in good condition at all times. This onsite setup allows members to view firsthand what is growing, the condition of the plants and soil. The members will also be aware of any draught issues for example, and what remediation efforts the farmers are taking to care for the crops. On pickup day, the Burns have setup a stand and a ‘buffet-style’ layout in which members can pick and choose up to a specific limit of produce for that week. This option creates a ‘festive’ environment on the farm in which members can interact with each other, the farmers, and exchange recipes. If any shortfalls exist, this mix and match buffet style provides the solution. Just like home delivery, members are given a one box to fill and refill weekly with their selections for the duration of the growing season.

3.4 Inventory Management

N/A. The CSA farm concept is all about freshness. The produce is delivered immediately from the farm to the (member’s) table.

3.5 Warehousing and Fulfillment

3.6 future products/services.

• The owners of the farm have plans to introduce honey bees the following season and offer honey as another organic product.
• On occasion, Franks Organic Farm partners with its neighboring dairy farm and an organic bakery in town. From time to time members will find fresh cheeses and organic breads in their weekly selection boxes. Franks Organic Farm owners are currently considering joining forces with a local orchard company as well. The orchard will supply apple butter and jams.
• Within one year, Franks Organic Farm plans to utilize an additional acre and add 30 more families to their growing share program. They plan to add 30 more families (shares) by Year Three.
• Franks Organic Farm has long term plans to purchase an additional 9 acres or a total of 360 shares. To support the farm, they will hire apprentice farmers, part-time delivery drivers and a bookkeeper. The Burns would then be able to focus their efforts on crop research, marketing trends and their members. Part of the focus of organic growing is returning back to the community. All employees will earn fair wages for work performed.
• Other future plans include accessing the internet to increase awareness and the importance of local and community farming. Kathy Burns is compiling a recipe E-book which will supplement cash flow during non-productive months. In his spare time, Frank Burns is also compiling an E-Book to sell on Franks Organic Farm website. The book will focus on modern organic farming techniques for the novice farmer. A second book is forthcoming dealing with environmental concerns and social responsibility.
• Additionally, Franks Organic Farm will publish a weekly newsletter to be included in the member’s box as well as the website. The newsletter will identify what is in the weekly box, what is happening on the farm and recipes. The newsletter will educate members to seasonal eating and sustainable principles.
• Franks Organic Farm has future plans for constructing a vegetable processing area with electricity and water. The facility will have a walk in cooler, a washing and grading area, stainless steel tables and two scales. Additional capital expenditures will be for the purchase of a newer (used) pickup truck and attachments for their tractor. (Currently they borrow their neighbor’s).

Sheboygan County’s cost of living is lower than the national average and housing costs are much lower than the national average. At the same time, Sheboygan County personal income is greater than the national average. In other words, this community not only has a high demand for organic items, but it can afford them as well.

4.1 Industry Analysis

This analysis is based on the North American Industry Classification System (“NAICS”) 111998: Agriculture – All Other Miscellaneous Crop Farming. The US crop production industry includes about 1 million farms with combined annual revenue of about $205 billion. Major companies include Dole Food Company, Chiquita Brands International, and Sunkist Growers. Crop farming is the growing and harvesting of field crops such as grain, oilseeds, tobacco, dry beans, potatoes, vegetables and melons, fruits and nuts, and floriculture.

Global crop production revenue exceeds $1 trillion. The US and China are among the top crop producers. Large companies outside the US include Fresh Del Monte Produce (headquartered in Cayman Islands); Total Produce (Ireland); and Amaggi Exportação e Importação (Brazil).

Demand is driven by federal agricultural policy programs, food consumption trends, and the grain and oilseed export market. The profitability of individual companies depends on maximizing crop yield and minimizing disease risk. Large companies have advantages in highly automated technologies and access to the latest in seed and crop technologies. Small operations can compete effectively by harvesting heirloom, non-genetically modified (GM), or specialty products. The industry is capital-intensive: average annual revenue per employee is about $390,000. (First Research)

The CSA makes the following generalizations/guidelines regarding its industry:

• New entrants should practice farming 2 years prior to making a commitment to the challenge of CSA farming
• In general, 20-30 shares per acre is possible
• 30 shares per farmer or laborer is possible
• To earn full time income 80-100 shares may be necessary
• The share price ranges from $300-$800 per share annually ($15-$40 per share weekly) (CSA – Michigan 2012)

4.1.1 Market Size

The US crop production industry includes about 1 million farms with combined annual revenue of about $205 billion. (First Research)

Although the USDA does not have official statistics on U.S. organic retail sales, information is available from industry sources. U.S. sales of organic products were $21.1 billion in 2008–over 3 percent of total food sales and were expected to reach $23.0 billion in 2009. (Nutrition Business Journal)

4.1.2 Industry Participants

Major participants include Dole Food Company, Chiquita Brands International, and Sunkist Growers. (First Research)

4.1.3 Main Competitors

Plymouth, Wisconsin reports six CSA entities, of which three represent direct competition for the subject.

Backyard Bounty W4873 County Hwy U Plymouth, WI 53073 http://ljcomerford.wordpress.com/

This is a 22 acre family owned farm and has been operating as a CSA for several years. In addition to its offerings of organic fruits and vegetables this farm also sells organic poultry and eggs. The farm had mixed reviews by its members.

Eilert’s Acres N5575 County Road ZZ Plymouth, WI 53073 http://www.eilertsacres.com/

Owned by Edward and Kay Eilert, this farm began business as a CSA in 2011. The farm provides many of the same vegetables as the subject as well as providing farm to door delivery service.

Springdale Farms W7065 Silver Spring Lane Plymouth, WI 53073 http://www.springdalefarmcsa.org/

This CSA farm is the most established in the direct market and has been in existence 20+ years. Springdale Farm has various pick up sites in the greater Sheboygan MSA. Based on the farm’s website, members are not given the option to select specialty vegetables and instead members are encouraged to ‘trade-in’ any unwanted produce back to the community to share and thus avoid waste. This has not proven to be a deterrent for the farm’s following. For the most recent growing season, the farm has a waiting list.

The following are CSA businesses that compete indirectly with the subject:

Old Plank Farm W6028 County Road C Plymouth, WI 53073 http://www.oldplankfarm.com/

This entity only sells its goods at a local farm stand; it does not sell shares. In addition, this indirect competitor sells organic eggs at its farm stand. Based on its limited selection and differing offerings, this indirect competitor attracts individuals who are only seeking small, specialty quantities of produce, but do not want to commit to purchasing shares for a full season.

Log Cabin Orchard N4797 County Rd E Plymouth, WI 53073 www.logcabinorchard.com

This indirect competitor is a fruit orchard selling apples, pears, plums, honey, apple and maple syrup, fresh apple cider and apple butter. In the fall, this CSA generally offers U-Pick apples options. Due its differing selection of products, this entity is not a direct competitor.

Red Twig Farm http://redtwigfarm.wordpress.com/

This entity only sells to Goodside Co-op and Trust Local Foods; because this CSA farm differs in its target client, it is does not represent a direct competitor for the subject.

4.1.4 Market Segments

2008, Sheboygan County’s median household in-come was $51,681 and the mean household income was estimated to be $61,889.

Nearly 72 percent of Sheboygan County’s housing units are owner-occupied. The median housing value in Sheboygan County is estimated to be $149,700, which is $43,000 less than the United States estimated median home value. At the same time, Sheboygan County income is higher than the national average, which is the reason for high home ownership rates.

Franks Organic Farm is targeting the households with incomes above $50,000. The target market represents approximately 51.5 percent of the total population, which should easily absorb Franks Organic Farm’s entrance.

Sheboygan County’s population is 117,566. It grew 4.4 percent between 2000 and 2009. The County is expected to continue to grow by a similar rate until 2015 when it reaches a population of 123,209.

4.2 Market Tests

While selling produce to local restaurants, Mr. Burns realized that the CSA option could potentially come to fruition. Historically the restaurant patrons always asked the source of the beautiful and delicate lettuces and quality tomatoes. Realizing the popularity of his produce, Mr. Burns, while continuing on a quest for global carbon footprint reduction, began researching the possibility of beginning a CSA effort. With the help of his restaurant partners, Mr. Burns posted fliers and brochures in their lobbies. By the end of the summer, Franks Organic Farm had presold 100 percent of the shares for the upcoming growing season.

4.3 Target Market Segment Strategy

Franks Organic Farm is targeting households with earnings in excess of $50,000 in the greater Sheboygan County. Approximately 51 percent of the population resides in this category. Other farmers have missed this target by focusing on traditional farming methods while Franks Organic Farm has obtained the Certified Organic stamp of approval. Additionally, Franks Organic Farm will focus its energies primarily on its members and provide services exceeding expectations by offering farm to door delivery service, providing supplemental local organic products and by providing a festive like atmosphere at the farm – especially on harvest day and other special occasions.

The following chart depicts the target market:

4.3.1 Market Needs

According to a USDA survey of market managers (Organic Produce, Price Premiums, and Eco-Labeling in U.S. Farmers’ Markets, April 2004) found that demand for organic products was strong or moderate in most of the farmers’ markets surveyed around the country, and that the managers felt more organic farmers were needed to meet consumer demand in many states. (USDA updated 06/19/12)

As demonstrated on the national map Sheboygan County represents a strong demand for organic produce.

“Organically” grown’ is the key. The term “organic” is now legally defined and can only be used to describe produce that is grown in accordance with the USDA rules and is certified as such by an independent agency.

4.3.2 Market Trends

While consumers may not understand all the requirements associated with being certified organic, they are comfortable with the label. Which is why Franks Organic Farm sought the services of the independent certification agency and has earned the distinction to be labeled an organic farm. Comparatively their CSA counterparts that continue to operate by traditional farming methods, Franks Organic Farm holds itself to a higher standard, which in time, they believe will attract and keep new members.

4.3.3 Market Growth

U.S. sales of organic products were $21.1 billion in 2008 – over 3 percent of total food sales- and were expected to reach $23.0 billion in 2009 (Nutrition Business Journal).

4.4 Positioning

Franks Organic Farm is aware that its members are crucial to its survival and growth. The owners will make certain each member feels that Franks Organic Farm is indeed his/her farm! After all, they do own a portion of the farm! The Burns will encourage its members to stop by to see operations. In addition the owners will host an open house at harvest time to celebrate the season’s bounty.

To further ensure its members are satisfied and encourage retention, the owners will use surveys and questionnaires as tools to gauge member satisfaction. The surveys/questionnaires will allow members to express feedback and also represent additional opportunities to communicate with Franks Organic Farm.

Franks Organic Farm is targeting households with earnings in excess of $50,000 in the greater Sheboygan County. Other farmers have missed this target by focusing on traditional farming methods while Franks Organic Farm has obtained the Certified Organic stamp of approval. Additionally, Franks Organic Farm will focus its energies primarily on its members and provide services exceeding expectations by offering farm to door delivery service, providing supplemental local organic products and by providing a festive like atmosphere at the farm – especially on harvest day and other special occasions.

5.1 SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. The following is the SWOT analysis for Franks Organic Farm.

5.1.1 Strengths

• Franks Organic Farm receives share proceeds prior to start of the season which helps to pay for seeds, supplies and inputs
• During the off-season the owners of Franks Organic Farm can market and recruit new members and complete their E Books
• Franks Organic Farm will establish long term relationships with its members lasting at least one season
• Members share in the financial risks of the farm
• Low capital requirements, relatively inexpensive startup business

5.1.2 Weaknesses

• As many as 30 or more different crops must be grown to provide diversity to members throughout the season
• Location-if the farm is not close to its customers, it becomes burdensome for the farmer to make deliveries
• Labor intensive – during the season, crops are continually being planted, harvested, cleaned, sorted and packed – leaving little extra time for the farmer
• Member retention is key – if the member is not happy the likelihood of returning next season or providing a good recommendation is not good.

5.1.3 Opportunities

• The greater Sheboygan County is a prime location for organic produce with an historically high demand.
• Because many farmers still utilize traditional farming methods (pesticide and herbicide applications) Franks Organic Farm stands out from the crowd with its Certified Organic stamp of approval

5.1.4 Threats

• New entrants to the market pose a threat. Partially mitigating this risk is the recommended 2-3 year trial farming period – which would give Franks Organic Farm the necessary ‘heads-up’ to go against (said) competitors.
• Weather, storms, pests – can damage or even destroy crops.
• The farm is economically tied, and in inflationary times, consumers could revert back to traditional methods of buying fruits and vegetables at the local grocery store.

5.2 Strategy Pyramid

Strategy Create awareness that Franks Organic Farm delivers a wide variety of quality wholesome and healthy vegetables on a consistent basis.

Tactics Create a specific, detailed planting guide, planting several times over the growing season.

Programs Post fliers and brochures at local restaurants, and locally owned and operated organic/natural item stores in town.

Strategy Create a community of awareness to think globally, act locally.

Tactics Constant communication with members will foster the awareness who in turn will relate these ideals to the local community.

Programs Host open house events at Franks Organic Farm for special events such as Harvest Time and Earth Day.

5.3 Unique Selling Proposition (USP)

Kathy and Frank Burns stand out from the competition: They are experienced operators and have demonstrated ability to grow large quantities of many different vegetables. They have demonstrated their ability to manage the crops, harvest, pack and deliver to their customers. They are doing business as a CSA. And unlike their conventional farming peers, Franks Organic Farm has met the stringent requirements to be designated Certified Organic.

5.4 Competitive Edge

CSA farming differs greatly from traditional farming due to the fact that members have ownership shares in the farm. Bearing this in mind, Franks Organic Farm will wholeheartedly focus on this vital aspect to retain members. The owners will constantly stay in touch with their members and encourage them to come and visit ‘their’ farm.

Unlike its traditional farm stand competitors, Franks Organic Farm will offer a variety of selections – up to 30 different types of produce during season. It should be noted that variety is a double edged sword: Many members will join a CSA because of the variety of offerings. It is important to have plenty of the basics like green beans, tomatoes and carrots. Conversely, too little a selection will be disappointing. To meet this balance, the Burns have created a questionnaire asking members what they prefer.

The Burns also provide weekly recipes and meal planning tips to coincide with the weekly boxes. Customers like the convenience of knowing how to prepare the items they are picking up from ‘their’ farm.

5.5 Marketing Strategy and Positioning

Franks Organic Farm will utilize product differentiation to stand apart from the competition. By growing wholesome organic produce, offering farm to door service, and actively engaging with its members, Franks Organic Farm will go above and beyond to maintain and grow its member base.

5.5.1 Positioning Statement

Franks Organic Farm will be the premier organic CSA in the greater Sheboygan County by offering at least 30 of the most delicious and mouth watering organic vegetables available in the local growing area and by providing exceptional relationships with its members, its community and the planet.

5.5.2 Pricing Strategy

Franks Organic Farm will utilize a fair price for a fair value. Some research suggests that the CSA farm is usually lower in price than organically grown food from local markets and is often less than foods from the supermarket. This could be a selling point for attracting new members, however, it also important to note this in not about cheap food.

5.5.3 Promotion and Advertising Strategy

The best strategy is word of mouth advertising. When people are happy with their shares they tell friends.

Franks Organic Farm will place brochures with other CSA businesses such as the local organic bakery and neighboring dairy farm.

Franks Organic Farm’s website will provide additional marketing information. In addition to its map and location, Franks Organic Farm will be listed with other CSA organizations such as national CSA and the USDA.

In the off season, the Frank Burns will provide lectures to civic and environmental groups.

During harvest time, the farm will be open to the public to browse and purchase surplus from the harvest bounty. They will also host special events such as Earth Day.

5.5.4 Website

Franks Organic Farm’s website will be a vital key in marketing. In addition to providing its history, location and contact information, the site will also have links to its CSA affiliations, the USDA website and current organic industry topics. The website will also have links to the current weekly newsletter (during season) and off season the owners will maintain a blog of what items are currently going to seedlings in the greenhouse and what new and exciting produce will be available in the upcoming season.

Additionally, the site will have links to Kathy and Frank’s forthcoming E-books which will provide additional cash flow during the non-production months.

The site will also take advantage of social media and have a Facebook link as well.

5.5.5 Marketing Programs

Franks Organic Farm will actively work to engage its members and local community by:

• Creating fliers and brochures and posting in community gathering places such as churches, community centers, farmers markets and other environmentally centric business.
• Franks Organic Farm’s website with emphasis on its USDA Certified Organic stamp of approval; the website will also have links to the USDA website and the national CSA website.
• Word of Mouth will play an important role

5.6 Sales Strategy

Franks Organic Farm has already sold all 30 of its shares for the upcoming season with future plans to sell 60 shares in Year Two and 90 shares in Year Three. In order to meet these goals, the farmers will continue to rely on advertising fliers, its online presence and most importantly word of mouth. The word of mouth recommendation from a satisfied member not only generates an opportunity for repeat business, but also is beneficial in recruiting new members.

5.6.1 Sales Forecast

The following table represents the annual sales forecast for the initial three years of operations:

Table 5.6.1 Annual Sales Forecast

5.6.2 Sales Programs

Franks Organic Farm’s primary sales program is the sale of shares. Additional sales programs will come from the sale of their forthcoming books. Honey production is expected to come online by Year Three.

During the slow winter months, both Frank and Kathy Burns will actively market their Franks Organic Farm, by providing speaking engagements at local events, becoming involved in the local community primarily its environmental issues, and writing and publishing papers supporting locally grown businesses. This slower time will also be utilized to create the weekly newsletter templates which coincide with the weekly deliveries. Historically the members love the newsletters – which facilitate additional contact between farmer and member. The weekly newsletter summarizes what is included in the weekly delivery, offers recipes and cooking suggestions, and summarizes what activities are transpiring at the farm. (This will be helpful especially during the busy summer months when there is little time available to write the weekly newsletters).

Franks Organic Farm is a C-Corporation doing business in the State of Wisconsin.

5.8 Milestones

The following chart depicts the Milestones Franks Organic Farm anticipates achieving:

Table 5.8 Milestones

5.9 Exit Strategy

In the event that Franks Organic Farm will cease operations, all assets (farm equipment, tools, scales) will be sold at auction. Proceeds from the sale will be first be used to pay off the financial obligation to the operating capital loan and the remaining proceeds will be paid to the members (if any obligations remain).

6.1 Organizational Structure

Franks Organic Farm will be wholly owned and operated by Frank and Kathy Burns. Mr. Burns will perform all office and accounting functions such as calculating the initial garden costs, seed costs and planting times. Both owners will harvest the crop. Franks Organic Farm will hire one apprentice farmer for each additional acre that is cultivated. Over time, they have plans to hire part-time delivery drivers as well as bookkeeper.

6.2 Management Team

Frank Burns, will actively manage the farm. Farm management duties will include the creation of a detailed planting guide and building a living soil. Only sustainable and organic farming methods will be used with no reliance on off-farm inputs and chemical pesticides/fertilizers. Growing methods include crop rotation, planting cover crops, applying finished compost and mulches, and encouraging beneficial insects, weed management, irrigation and harvesting. Mr. Burns will also be responsibility for preparing detailed accounting records for their tax accountant.

Kathy Burns will also actively participate in managing the crop during the busy summer months. During the slower winter months, both will work to complete their E-books which will be sold on line and supplement revenue. They will also actively market Franks Organic Farm by speaking to local civic groups, providing tours of the farm, and drafting the weekly newsletters.

6.3 Management Team Gaps

Franks Organic Farm will rely on its Tax Accountant to assist with tax reporting.

6.4 Personnel Plan

The following is a summary of Franks Organic Farm’s Personnel Plan.

Table 6.4 Personnel Plan

6.5 Board of Directors

The financial plan will cover the following:

• Required Cost of Start-Up
• Profit and Loss
• Balance Sheet
• Financial Ratios

7.1 Important Assumptions

• Revenues increase 50% Year One and 33% Year Two
• The following variable expenses are tied to volumes and will increase the same amount as revenue: salaries, fuel charges, postage, repairs and maintenance and supplies
• The loan example is based on traditional lending – with a collateralized working capital loan, fully amortizing with a three year pay down.
• The loan interest rate is based on the Prime Lending Rate plus 4.00%; Wall Street Journal Prime at this writing is 3.25%

7.2 Start-Up Costs

The following chart summarizes start-up expenses:

Table 7.2 Start-Up Costs

7.3 Source and Use of Funds

To date, the owners have come out of pocket approximately $40,600 or 74 percent of the project’s total costs. The following chart summarizes the source and use of funds:

7.4 Break-Even Analysis

Total fixed costs are estimated to be $18,437. The variable costs (salaries, fuel charges, postage, repairs and maintenance, and supplies) are estimated to be $109.74 per unit (full share). Units are considered full shares for analysis purposes and do not consider half shares. Based on the assumption of $750 as the average share price, the breakeven revenue then is $21,597 or 4 units (shares). This is further depicted in the Table Below and the Graph that follows:

7.5 Projections

7.5.1 projected profit and loss.

Franks Organic Farm’s estimated profit and loss for the initial three years of operations is reflected below:

Table 7.5.1 Pro Forma Profit and Loss

7.5.2 Projected Cash Flow

The statement of cash flow shows the incoming and outgoing cash of Franks Organic Farm:

Table 7.5.2 Pro Forma Cash Flow

7.5.3 Projected Balance Sheet

The following chart depicts the proforma balance sheet:

7.6 Business Ratios

The following ratios are based on the North American Industry Classification System (NAICS) code 111998– All Other Miscellaneous Crop Farming. The ratio analysis compares the subject to industry peers based on similar asset size and revenues.

Table 7.6 Ratio Analysis

• Agriculture

Livestock Farming

Aquaculture

Poultry Farming

• Environment-friendly process : Natural pesticides can be used for organic farming such as neem, compost tea, chamomile oil, etc. which are environment-friendly and non-toxic in nature. This increases the crop defence system. And also these substances help in decreasing the rate of occurrence of a disease in the plants.
• Enhances soil sustenance: Soil management is effectively addressed by organic farming methods. The crop rotation can help in regaining the nutrition of the soil and prevent the soil from erosion. The microbes work effectively in the soil and provide nourishment to it.
• Resistance to pests and diseases: guaranteed crop quality can be given by the practices such as hand-weeding, soil enhancement with mulch, corn gluten meal, garlic and clove oil sprays.
• Increased drought Tolerance: Drought can be tolerated by the organically grown plants. The slats can be added for the fertilization of the plants and they can maintain sufficient water levels. Water-logging can result in the death of the plants. Even over salts can also result in the death of plants.
• Diminished growing cost: Organic farming is less economic, efficient, provides increased profits as the water use is reduced, low expenditure on pesticides and fertilizers. Organic produce has added value in the market, which makes organic farming a profitable option for farmers.

DISADVANTAGES OF ORGANIC FARMING:

• Time-consuming: In organic farming, a significant amount of time should be spent on the farm for executing the detailed methods and techniques that should be implemented. Failure with any of these methods does not guarantee the certification for the produce.
• Requires-skill : A farmer who is farming to produce organic products should have a greater understanding of the skills of the crop production. He should also understand the importance and use of the natural pesticides and insecticides.
• Lower productivity: Unlike the conventional farm, the organic farm cannot give much yield. As per the studies and survey conducted in the year of 2008 by UN ENVIRONMENTAL PROGRAM which says the organic method of farming gives a small yield when compared to conventional farming techniques.

Organic Farming Business Plan – MANAGEMENT IN ORGANIC FARMING:

The concept of organic farming involves and revolves around the concepts of healthy living soil, crop residue management, proper crop patterns, and effective crop rotation. The crop is ensured without any loss of fertility to the soil. Also the farming respects the natural ecology such as weather, flora and fauna of certain place. The basic step in organic farming is to acquire the primary requirements.

Some specific challenges faced by the organic farmers in India are:

• High costly inputs as opposed to low returns.
• Water supply at a reduced level.
• High increase in the temperature.
• Due to the loss of organic matter and soil microbes the health of the soil is poor.

For a productive, sustainable and cost-effective system to address the above issues there has to be a protocol.

• Conservation of Rain water: The most important step in organic farming is the rain water conservation, which is the only natural way of irrigation and the sources are seasonal rains, lakes, wells, and local ponds. For flow of water to the farms and storage percolation tanks in the farms are dug and the cultivation is practiced in the bunds and contours.
• Enrichment of soil: The soil loses its fertility and nutrients after the cultivation of the crop and the quality of the soil also depletes. The animal waste which is used as the manure to the crop consist of nutrients, making agents that help the soil for more productive cultivation if the crop.
• Temperature management: Due to the effects of global warming the temperature is increasing day by day. In organic farming the crop must be covered from the heat. The bunds should be completely planted with the bushes and trees. For the protection of the crop from excessive heat.
• Optimal use of solar energy and all other renewable energy: The energy can be generated naturally through biogas and solar systems, both of which are Eco friendly and are renewable sources. The crop plantation should be scheduled effectively using the crop rotation concept throughout the year.
• Natural habitation: The natural habitation should be minted without destroying or disturbing it by using the chemical pesticides and fertilizers.
• Animal integration: The animals are most important part of the organic farming as their droppings are used as the manure for fertilizing the land and the crop. The raw materials that are good for the crops are the cow dung and the poultry droppings.
• Other unique techniques: S ome of the techniques which are useful to the crop are developing own seed varieties, vermicomposting, farm composting, production using all the botanical extracts and liquid manure.

Organic Farming Business Plan – ORGANIC FARMING PROCEDURE:

For setting an organic farm and to get it certified there are some requirements to be followed. They are enlisted as:

Conversion Period : If the farm is not fully organic and the farmers are practicing the conventional method, then there should be a plan for the conversion method. The conversion period is the beginning of organic operation till the certification. The quality of the land decided the conversion period. The fields like organic and inorganic must be maintained and clearly marked. The livestock is introduced into the entire farm over a period of time. The time period of the conversion method is 3 years for the perennials and for annuals 2 years.

Mixed farming: It is a mixed practice of different farming structures like sericulture, aquaculture, Pisciculture, animal husbandry and poultry management, etc. All these processes done in a combination is known as the mixed farming. This farming method ensures good soil fertility and crop yield.

Cropping patterns: By practicing effective crop rotations and patterns can help in the maintenance of the soil, which is the most essential component of the organic farming. The repetition of same crop cultivation may affect the soil and its fertility level. The intercropping which is a cultural practice helps maintain the soil fertility and its vitality. The crops which are used for intercropping are turmeric, ginger, sweet potato, etc. The crop of mango is often used in the intercropping with elephant foot yam, sweet potato, cassava. The maize is intercropped with vegetables like cabbage, radish or cucumber. The plants grown together most often are onion and pepper. The intercropping also gives a benefit of managing the insect pests and diseases.

Planting in organic farming: The specifications such as climate, weather and soil of the plants that are most suitable should be known to the farmer. The crop species and other varieties must be chosen properly such that they can adapt well to the soil conditions. The cultivation like pollen seeds, tissue seeds transgenic plants, genetically modified seeds are not allowed in the organic farming.

Manure Requirements: The fertility of the land can be maintained by planting leguminous crops, green manure crops, etc. Biodegradable materials can be used as manures. Crop and animal residues must be recycled back into the soil directly or indirectly. The manures like sheep penning, vermicompost and farmyard manure (FYM) are allowed for the fertilization of crops but not chemicals. These products are approved for organic fertilization, but can be used under emergency:

• Sodium chloride, calcium chloride, chalks etc.
• Vermicompost
• Magnesium rocks
• Mulches, crop residues and farmyard manure.
• Bio dynamic compounds
• Bio- fertilizers like Rhizobium, Azospirillum etc.
• Sawdust and wood shavings from untreated wood.

The factors like nutritional imbalance, contamination, depletion of natural resources must be calculated while considering organic farming.

Disease and pest management: Diseases and pests can’t be controlled with fungicides, weedicides and pesticides as they are prohibited in the organic farm land. The natural enemies are grown for the protection of crop from the pests. An example for protecting the crop is planting a tree in the farm or constructing a bird nest which encourages the influx of birds and helps prevent the insects. The pests should be removed using pheromone traps and chromatic traps. To control the diseases and pests using genetically processed organisms is also prohibited. Natural manual weeding is mostly preferred. For the control of weeds, diseases and pests the below products can be used under necessary circumstances.

• Bordeaux minerals
• Mineral oils – kerosene
• Plant and animal residues.

Organic Farming Business Plan – HOW TO START ORGANIC FARMING:

• Initial research:

When you take a decision to undertake organic farming it should have a commendable number of people who are turning away from the chemically fertilized farm products to the organic farmed products. You need to know all the facilities and discuss about the requirements that you need with the concerned people. The focus is made on learning about resource mobilization to start the business and maintain it.

• Determine crop’s agreement with current conditions:

We need to assess the type of product we want to cultivate in the organic farming process and the attributing factors like soil, climatic conditions, irrigation and popularity in local markets, etc. The soil should be tested by the local government agency for its pH, alkalinity, water retention, porosity levels and nutrition. Personal preference over the market’s demand can bring loss.

• Crafting a comprehensive business proposal:

For securing a loan for your venture, you need to have some detailed business plan indicating your aim, focus on the type of organic crop, targeted market, present competition, finance, scope in the business area etc. These all are roadmaps for organic production.

• Ready your firm and mobilization resources:

You should be prepared financially for planting the crop. And the irrigation facility must be ensured with available sources. The chemicals that harm the plants should not be used and the plant should receive sufficient amount of sunlight. We should never neglect the finances required for the modern equipment during farming for the organic products. Aeration of the soil is extremely important.

Organic Farming Business Plan GOVERNMENT SCHEMES FOR PROMOTING THE ORGANIC FARMING:

Organic farmers get subsidy from the Indian government on capital investment into organic farming with the help of two different organizations. The primary object is to improve the resources for organic farming and increases the productivity without disturbing the soil and natural ecosystem.

The reduced dependence on chemical aids and converting organic wastes into plant nutrition sources is provided extra incentives.

The subsidy is given to the organic farmer @ 25% of the net project cost (INR 40 Lakhs maximum limit) for bio-fertilizer and pesticides units, and 33% of fruit and vegetable compost units (INR 60 Lakhs maximum).

The period of time for organic farming should materialize within 15 months with the grace period of 3 additional months.

Organic Farming Business Plan – FUTURE OF ORGANIC FARMING:

India has a promising future in the organic agriculture industry. Reasons for this organic demand is due to health awareness among the masses, stringent governmental rules for pollution control and greenhouse gas reduction, subsidies, export law relaxation etc. after the launch of GST the bio input now have 18% tax which increase the production cost. The higher the price of domestic organic produce the weaker it stands in the international markets.

Organic Farming Business Plan – PROFITABILITY OF ORGANIC FARMING IN INDIA:

The organic farming in India can be prosperous only if it is able to reach the right market. Profits can be increased by:

• Certifying the organic produce give higher market value.
• Reducing the farm input by using animal residue, bio-fertilizers etc.

The organic farming methods must be strictly followed to produce high quality products which can be easily certified and marketed.

Organic Farming Business Plan – CONCLUSION:

The organic farming is preferred as a sustainable source of farming as it preserves the biodiversity and improves the ecological balance. It is a safe mode of farming, but needs time for being functional and produce results. The certification of the organic products can be obtained by keeping away the chemical and genetic contaminants away throughout the process of production, storage, handling and harvest sale. Organic farming has a high growth rate owing to its importance in the entire world.

Read Raising Free Range Chicken .

Read microgreens farming ..

Very informative for new entrants to organic farming. Thanks.

Very informative Thank you

Thank you very much. My doubts cleared about this subject.

Thank you Mr.Reddyy, well written doc, sweet and short.

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Center for Commercial Agriculture

May 7, 2024

Discussing Key Resources and Risk Exposure in Your Farm Business Plan

by Margaret Lippsmeyer, Michael Langemeier, and Michael Boehlje

Introduction

Developing a business plan for your farm helps align day-to-day operations with overarching business goals. In this article, we explore the importance of assessing current business resources and exposure to risk while creating a business plan. We provide discussion on risks to your business’s key resources, a framework to evaluate the strength of your farm’s resource base, and an outline of how to craft an effective business plan. These topics link back to our previous articles on integrated risk management (Lippsmeyer, Langemeier, and Boehlje, 2024a) and key resources (Lippsmeyer, Langemeier, and Boehlje, 2024b) where we discussed how macroeconomic factors and other external shocks can influence timing and effectiveness of investments in key business resources.

Assessing Resources

Availability and strength of key resources—including financial, physical, human, organizational, and information technology—should shape your business objectives and determine an effective business plan. Business objectives and business plans should focus on strengthening your farm’s key resource base. This resource base acts as a foundation for potential farm expansion, or ability to withstand shocks or stresses in the business environment. Evaluating key resources is a critical initial step in business planning, ensuring you have accurate benchmarks for your business’s resources. These benchmarks help to identify which key resources to leverage and which need to be strengthened.

In the next sections we discuss different types of key resources and major risks associated with each. In addition to this discussion, Figure 1 poses a series of questions which can be used to assess the strength of your farm’s key resources. These questions are intended to pinpoint potential shortcomings in a farm’s resource base, thereby assisting in the development of a business plan that addresses resources needing improvement. Figure 2 illustrates risk exposure by resource category.

Figure 1: Assessing Strength of Business Resources,  Adapted from Olsen (2007)

Figure 2: Risk Exposure

Organizational Resources

Organizational resources are the glue which binds together physical, financial, human resources, and information technology, giving direction and meaning to a farming operation. Organizational resources include business reputation, core values, operational structures, and systems, and play a vital role in differentiating your farm from competitors. For example, most operations can effectively produce yellow corn, but consistent product quality, reliable logistics, trustworthy relationships with input suppliers and product distributors are ways in which your organizational resources may yield a competitive advantage. Many risks associated with organizational resources are considered strategic risks. Strategic risks are caused by external shocks or stresses which create a misalignment between a farm’s business strategy and available resources and capabilities (Lippsmeyer, et al., 2023). These risks lack off-the-shelf risk mitigation strategies, making them particularly threatening for businesses. Risks to organizational resources exemplify strategic risk: coming from a variety of sources, are known to cause brand erosion, tarnish reputation, obscure business strategy, and lack effective tools to mitigate these risks.

Adverse weather conditions reducing crop yield is often categorized as a production risk. However, if as a consequence your operation fails to fulfill a sales contract, the risk becomes a strategic risk, impacting your business’s reputation. Although distributors may have alternative sources to compensate for your shortfall, your farm’s reliability in meeting contractual obligations could come under scrutiny. This could adversely affect your future prospects of securing contracts with the same distributor.

Brand erosion and loss of reputation frequently relate to three factors: price, timeliness, and quality. Balancing a competitive price and product quality is a challenge which impacts a farm’s ability to maintain a positive reputation and retain customers. Moreover, perceptions of certain farming practices (i.e., production using certain chemicals or hormone treatments), negative publicity, or increases in competition may also contribute to brand erosion and reputation loss.

The clarity of a business strategy is another component of strategic risk. Business strategy may become compromised due to complexities of relationships between operators, employees, and outside parties; or through attempts to expand to seize economies of scope. For example, business strategy may become unclear during periods of high employee turnover or when a business expands into new market channels. Periods high turbulence, when structure, goals, and values become unclear, are when resilience is most necessary. Operational resilience can serve as a dynamic buffer, enabling quick adaptation to internal and external pressures, and sufficient slack resources to provide leeway while maneuvering through unforeseen challenges (Lippsmeyer and Langemeier, 2023).

Information Technology

Information technology draws parallels between the collection and use of farm data to the concept of ‘surveillance capital’ used to enhance social media platforms (Lippsmeyer, Langemeier, and Boehlje, 2024b). In the context of production agriculture, information technology provides data-driven insights, helping producers identify operational inefficiencies, and assisting in on farm decision-making. The effectiveness of this resource is highly dependent on data collection, organization, and ability to accurately analyze the data and draw correct interpretations.

A common risk associated with information technology is data security. Whether it is financial data collected by a lender, input supplier data, or your farm production data, there are significant concerns about how to protect data from being stolen or accessed without permission. Strategies to limit data accessibility include user authentication to ensure only authorized users can access your farm records, data encryption for sending sensitive information, and access control limits to restrict who can view, modify, or delete data. In the age of increasing data collection and use, it is critical to read and fully understand contracts with equipment or information technology companies prior to signing away rights, and subsequently, knowing how to revoke access if necessary.

Risks relating to information technology span beyond data security. Often even if data collection and storage is done in a secure manner, there remain difficulties or limitations associated with data processing. This poses potential issues of uninformed or ill-informed farm decisions if incorrect conclusions are drawn from analysis, despite best efforts to use data driven insights.

Financial Resources

Financial resources include cash, investments, equity, and receivables, all of which provide liquidity to fund business expenses and updates to physical resources. Sufficient financial resources ensure farming operations can pursue new opportunities when they arise and have ability to weather through unexpected periods of high input costs or low market prices. Risks to financial resources include limited access to debt or equity capital and insufficient liquidity. Without the availability of financial resources, the ability to grow or seize new opportunities is significantly constrained, if not entirely unfeasible.

Physical Resources

Physical resources include land, machinery, buildings, and inventories. These assets are characterized by significant initial investment, continual need for maintenance, and a lack of liquidity relative to financial resources. Assessments of physical resources may vary based on the type of farming operation and the type of resource but generally take into account the resource’s useful life, initial level of investment, quality of maintenance, and salvage value. For example, maintaining land resources may involve soil testing, use of fertilizers to improve nutrient content, or use of cover crops to prevent erosion. While other physical resources like planters and combines need much more frequent maintenance and replacement after exhaustion of their useful life.

One of the major risks related to physical resources is inefficient use (i.e., low utilization rates). Inefficient use of machinery or storage facilities results in higher than necessary production costs. However, inefficient use may be justified in some scenarios. While inefficient use of physical resources is undesirable in the long run, for an operation that plans to grow, having some degree of slack may increase flexibility.

Other risks include improper care and overuse of a resource. These risks are often attributed to poor management or lack of investment due to ownership structure – for example, producers who rent versus own machinery or farm ground are typically more hesitant to make major investments because there is no guarantee they will reap the future benefit from the investment.

Inventories are the final physical resource we will address. Inventories, particularly stored crops, present unique risks including contamination with aflatoxin, insect infestation, or fire in storage bins from inadequate drying procedures. Inventories are the most liquid physical resource for farming operations, typically being sold within one year of harvest, and often used to supplement financial resources.

Human Resources

There are two varieties of human resources we will discuss: those internal to an operation and those which are external. Internal human resources include employees, management, company owners, as well as the relationships, knowledge, and competencies of each. These resources have extensive operational and industry knowledge which is built through time. Prior research shows experience displays positive relationships with profitability and financial efficiency (Vanhuyse, Bailey, and Tranter, 2021). Lippsmeyer, Langemeier, and Boehlje (2024b), discuss the importance of human resources and provide strategies for how to attract and retain quality employees. Risks relating to internal human resources include talent shortages, insufficient workforce, employee retention, and lack of experience. Losing employees incurs significant operational costs, both directly (due to insufficient labor availability) and indirectly (due to loss of tacit operational knowledge) (Spender and Grant, 1996).

External human resources include customer relations, interactions with and knowledge of suppliers. These relationships are more challenging to control due to their indirect connection with a business, yet remain critical for success. Risks relating to customer relations include losses of long-term customers and related market opportunities. Often these risks are closely related to product quality, pricing, and timeliness, as well as organizational resources. If customers perceive you as an unreliable supplier, relationships will deteriorate quickly. Maintaining consistent product quality, efficient logistics, knowledgeable employees, and quality service are all strategies businesses use to encourage longevity of reliable customer relationships (Claycomb and Martin, 2001).

Supplier risks include untimely deliveries, varying quality of inputs, and excessive or unexpected costs. These factors have the potential to influence quality or price of a product, potentially reflecting poorly on your business. Careful and frequent evaluation is necessary to decide which suppliers to continue doing business with, how to set and maintain input standards, and strategies to reward suppliers for desirable behaviors.

Setting Business Objectives

Obtainable business objectives are a critical part of every good farm business plan, so a direct path can be plotted from current performance levels to improved performance where objectives are met. Objectives may vary by enterprise, but likely revolve around improving quality standards, profitability metrics, and timeliness.

Objectives may include achieving specific quality benchmarks for products, retaining a specific proportion of contract agreements from year to year, ensuring a given percentage of deliveries are completed on time, or having management take part in strategy, business, or leadership improvement workshops. Objectives relating to information technology include learning to collect and store yield data, or developing systems to analyze the impact of different inputs on crop health. Objectives for financial resources include achieving specific financial ratio benchmarks, paying off high-interest lines of credit, or saving to invest in a new piece of machinery. Objectives to enhance and maintain human resources might involve hiring additional staff, offering career development opportunities, or offering incentives for loyal customers.

Developing A Business Plan

Using Figure 1, we encourage you to evaluate each of your farm’s key resources to help pinpoint any weaknesses in your resource base and subsequently identify areas in your operation needing improvement. Business plans should begin by identifying strengths or weaknesses of current resources, assessing the implications of relative strengths (or weaknesses) in achieving business objectives, and then focus on setting up step by step plans to achieve those objectives.

Once your business plan has been created, considerations also need to be made for the timing of major organizational changes or substantial investments. Both external shocks (e.g., macroeconomic uncertainties) and available operational slack must be considered to identify optimal timing to improve your resource base (Lippsmeyer, Langemeier, and Boehlje, 2024b).

In order to identify actions effective in making change, regular evaluations with consistent standards must be used to assess resource strength and progress made towards achieving objectives. Continually assessing strengths and weaknesses of key resources and identifying potential improvements can prevent businesses from developing a ‘needs-based strategy’ which waits for major issues to arise, then scrambles to control damage.

Conclusions

This article has provided a discussion of key resources and risks associated with each. By considering the strengths and weaknesses of your resource base, combined with the appropriate timing for investments, you will be better equipped to develop an effective business plan. Using the tools provided in this article, we prompt you to critically assess your farm’s key resources and develop a business plan which progresses from your current resource base to achieving business objectives.

Claycomb, C. and C.L. Martin, C. L. (2001). “Building Customer Relationships: An Inventory of Service Providers’ Objectives and Practices.” Marketing Intelligence & Planning, 19 (6). doi: https://doi.org/10.1108/EUM0000000006109

Lippsmeyer, M. and M. Langemeier. (2023). “ Agility and Absorption Capacity .”  Center for Commercial Agriculture, Department of Agricultural Economics, Purdue University, April 20.

Lippsmeyer, M., M. Langemeier, J. Mintert, and N. Thompson.  (2023). “ Resilience to Strategic Risk .”  Center for Commercial Agriculture, Department of Agricultural Economics, Purdue University, June 20.

Lippsmeyer, M., M. Langemeier, and M. Boehlje.  (2024a). “ Integrated Risk Management: Developing an Asset-Based Business Strategy .”  Center for Commercial Agriculture, Department of Agricultural Economics, Purdue University, March 15.

Lippsmeyer, M., M. Langemeier, and M. Boehlje.  (2024b). “ Key Resources Determining the Future of the Farm .”  Center for Commercial Agriculture, Department of Agricultural Economics, Purdue University, April 4.

Olsen, E. (2007). Assessing Your Business and Its Capabilities. In Strategic Planning for Dummies (pp. 121-140). Indianapolis: Wiley Publishing, Inc.

Spender, J., and R. Grand, R. (1996). Knowledge and the Firm: Overview. Strategic Management. doi: https://doi.org/10.1002/smj.4250171103

Vanhuyse, F., A. Bailey, and R. Tranter. (2021). “Management Practices and the Financial Performance of Farms.” Agricultural Finance Review, 81(3) . doi: https://doi.org/10.1108/AFR-08-2020-0126

risk , strategic risk

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Related resources, farm resilience, management practices, and producer sentiment: segmenting u.s. farms using machine learning algorithms.

Margaret Lippsmeyer, Michael Langemeier, James Mintert, and Nathan Thompson segment U.S. farms by farm resilience, management practices, and producer sentiment. This paper was presented at the Southern Agricultural Economics Meeting in Atlanta, Georgia in February. 

Key Resources Determining the Future of the Farm: Human Capital & Information Technology

This article emphasizes the significance of human resources and information technology (the ability to manage and analyze data) as we transition into a new era of production agriculture. This new era brings further innovation of agricultural technology, information processing, and use of artificial intelligence to digitize agriculture.

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2024 crop cost and return guide.

The Purdue Crop Cost and Return Guide offers farmers a resource to project financials for the coming cropping year. These are the March 2024 crop budget estimations for 2024.

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(Part 1) Indiana Farmland Values 2023 Update

Purdue ag economists Todd Kuethe, James Mintert and Michael Langemeier discuss Indiana farmland values on this, the first of two AgCast episodes discussing the 2023 Purdue Farmland Values and Cash Rents Survey results. Each June, the department of agricultural economics surveys knowledgeable professionals regarding Indiana’s farmland and cash rental market.

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Discussing Key Resources and Risk Exposure in Your Farm Business Plan

• Margaret Lippsmeyer, Michael Langemeier , and Michael Boehlje
• Center for Commercial Agriculture
• Purdue University

Introduction

Developing a business plan for your farm helps align day-to-day operations with overarching business goals.  In this article, we explore the importance of assessing current business resources and exposure to risk while creating a business plan.  We provide discussion on risks to your business’s key resources, a framework to evaluate the strength of your farm’s resource base, and an outline of how to craft an effective business plan.  These topics link back to our previous articles on integrated risk management (Lippsmeyer, Langemeier, and Boehlje, 2024a) and key resources (Lippsmeyer, Langemeier, and Boehlje, 2024b) where we discussed how macroeconomic factors and other external shocks can influence timing and effectiveness of investments in key business resources.

Assessing Resources

Availability and strength of key resources—including financial, physical, human, organizational, and information technology—should shape your business objectives and determine an effective business plan.  Business objectives and business plans should focus on strengthening your farm’s key resource base.  This resource base acts as a foundation for potential farm expansion, or ability to withstand shocks or stresses in the business environment.  Evaluating key resources is a critical initial step in business planning, ensuring you have accurate benchmarks for your business’s resources.  These benchmarks help to identify which key resources to leverage and which need to be strengthened.

In the next sections we discuss different types of key resources and major risks associated with each.  In addition to this discussion, Figure 1 poses a series of questions which can be used to assess the strength of your farm’s key resources.  These questions are intended to pinpoint potential shortcomings in a farm’s resource base, thereby assisting in the development of a business plan that addresses resources needing improvement.  Figure 2 illustrates risk exposure by resource category.

Figure 1. Assessing Strength of Business Resources

Adapted from Olsen (2007)

Organizational Resources

Organizational resources are the glue which binds together physical, financial, human resources, and information technology, giving direction and meaning to a farming operation.  Organizational resources include business reputation, core values, operational structures, and systems, and play a vital role in differentiating your farm from competitors.  For example, most operations can effectively produce yellow corn, but consistent product quality, reliable logistics, trustworthy relationships with input suppliers and product distributors are ways in which your organizational resources may yield a competitive advantage.

Many risks associated with organizational resources are considered strategic risks.  Strategic risks are caused by external shocks or stresses which create a misalignment between a farm’s business strategy and available resources and capabilities (Lippsmeyer, et al., 2023).  These risks lack off-the-shelf risk mitigation strategies, making them particularly threatening for businesses.  Risks to organizational resources exemplify strategic risk: coming from a variety of sources, are known to cause brand erosion, tarnish reputation, obscure business strategy, and lack effective tools to mitigate these risks.

Adverse weather conditions reducing crop yield is often categorized as a production risk.  However, if as a consequence your operation fails to fulfill a sales contract, the risk becomes a strategic risk, impacting your business’s reputation.  Although distributors may have alternative sources to compensate for your shortfall, your farm’s reliability in meeting contractual obligations could come under scrutiny.  This could adversely affect your future prospects of securing contracts with the same distributor.

Brand erosion and loss of reputation frequently relate to three factors: price, timeliness, and quality.  Balancing a competitive price and product quality is a challenge which impacts a farm’s ability to maintain a positive reputation and retain customers.  Moreover, perceptions of certain farming practices (i.e., production using certain chemicals or hormone treatments), negative publicity, or increases in competition may also contribute to brand erosion and reputation loss.

The clarity of a business strategy is another component of strategic risk.  Business strategy may become compromised due to complexities of relationships between operators, employees, and outside parties; or through attempts to expand to seize economies of scope.  For example, business strategy may become unclear during periods of high employee turnover or when a business expands into new market channels.  Periods high turbulence, when structure, goals, and values become unclear, are when resilience is most necessary.  Operational resilience can serve as a dynamic buffer, enabling quick adaptation to internal and external pressures, and sufficient slack resources to provide leeway while maneuvering through unforeseen challenges (Lippsmeyer and Langemeier, 2023).

Information Technology

Information technology draws parallels between the collection and use of farm data to the concept of ‘surveillance capital’ used to enhance social media platforms (Lippsmeyer, Langemeier, and Boehlje, 2024b).  In the context of production agriculture, information technology provides data-driven insights, helping producers identify operational inefficiencies, and assisting in on farm decision-making.  The effectiveness of this resource is highly dependent on data collection, organization, and ability to accurately analyze the data and draw correct interpretations.

A common risk associated with information technology is data security.  Whether it is financial data collected by a lender, input supplier data, or your farm production data, there are significant concerns about how to protect data from being stolen or accessed without permission.  Strategies to limit data accessibility include user authentication to ensure only authorized users can access your farm records, data encryption for sending sensitive information, and access control limits to restrict who can view, modify, or delete data.  In the age of increasing data collection and use, it is critical to read and fully understand contracts with equipment or information technology companies prior to signing away rights, and subsequently, knowing how to revoke access if necessary.

Risks relating to information technology span beyond data security.  Often even if data collection and storage is done in a secure manner, there remain difficulties or limitations associated with data processing.  This poses potential issues of uninformed or ill-informed farm decisions if incorrect conclusions are drawn from analysis, despite best efforts to use data driven insights.

Financial Resources

Financial resources include cash, investments, equity, and receivables, all of which provide liquidity to fund business expenses and updates to physical resources.  Sufficient financial resources ensure farming operations can pursue new opportunities when they arise and have ability to weather through unexpected periods of high input costs or low market prices.  Risks to financial resources include limited access to debt or equity capital and insufficient liquidity.  Without the availability of financial resources, the ability to grow or seize new opportunities is significantly constrained, if not entirely unfeasible.

Physical Resources

Physical resources include land, machinery, buildings, and inventories.  These assets are characterized by significant initial investment, continual need for maintenance, and a lack of liquidity relative to financial resources.  Assessments of physical resources may vary based on the type of farming operation and the type of resource but generally take into account the resource’s useful life, initial level of investment, quality of maintenance, and salvage value.  For example, maintaining land resources may involve soil testing, use of fertilizers to improve nutrient content, or use of cover crops to prevent erosion.  While other physical resources like planters and combines need much more frequent maintenance and replacement after exhaustion of their useful life.

One of the major risks related to physical resources is inefficient use (i.e., low utilization rates).  Inefficient use of machinery or storage facilities results in higher than necessary production costs.  However, inefficient use may be justified in some scenarios.  While inefficient use of physical resources is undesirable in the long run, for an operation that plans to grow, having some degree of slack may increase flexibility.

Other risks include improper care and overuse of a resource.  These risks are often attributed to poor management or lack of investment due to ownership structure – for example, producers who rent versus own machinery or farm ground are typically more hesitant to make major investments because there is no guarantee they will reap the future benefit from the investment.

Inventories are the final physical resource we will address.  Inventories, particularly stored crops, present unique risks including contamination with aflatoxin, insect infestation, or fire in storage bins from inadequate drying procedures.  Inventories are the most liquid physical resource for farming operations, typically being sold within one year of harvest, and often used to supplement financial resources.

Human Resources

There are two varieties of human resources we will discuss: those internal to an operation and those which are external.  Internal human resources include employees, management, company owners, as well as the relationships, knowledge, and competencies of each.  These resources have extensive operational and industry knowledge which is built through time.  Prior research shows experience displays positive relationships with profitability and financial efficiency (Vanhuyse, Bailey, and Tranter, 2021).  Lippsmeyer, Langemeier, and Boehlje (2024b), discuss the importance of human resources and provide strategies for how to attract and retain quality employees.  Risks relating to internal human resources include talent shortages, insufficient workforce, employee retention, and lack of experience.  Losing employees incurs significant operational costs, both directly (due to insufficient labor availability) and indirectly (due to loss of tacit operational knowledge) (Spender and Grant, 1996).

External human resources include customer relations, interactions with and knowledge of suppliers.  These relationships are more challenging to control due to their indirect connection with a business, yet remain critical for success.  Risks relating to customer relations include losses of long-term customers and related market opportunities.  Often these risks are closely related to product quality, pricing, and timeliness, as well as organizational resources.  If customers perceive you as an unreliable supplier, relationships will deteriorate quickly.  Maintaining consistent product quality, efficient logistics, knowledgeable employees, and quality service are all strategies businesses use to encourage longevity of reliable customer relationships (Claycomb and Martin, 2001).

Supplier risks include untimely deliveries, varying quality of inputs, and excessive or unexpected costs.  These factors have the potential to influence quality or price of a product, potentially reflecting poorly on your business.  Careful and frequent evaluation is necessary to decide which suppliers to continue doing business with, how to set and maintain input standards, and strategies to reward suppliers for desirable behaviors.

Setting Business Objectives

Obtainable business objectives are a critical part of every good farm business plan, so a direct path can be plotted from current performance levels to improved performance where objectives are met.  Objectives may vary by enterprise, but likely revolve around improving quality standards, profitability metrics, and timeliness.

Objectives may include achieving specific quality benchmarks for products, retaining a specific proportion of contract agreements from year to year, ensuring a given percentage of deliveries are completed on time, or having management take part in strategy, business, or leadership improvement workshops.  Objectives relating to information technology include learning to collect and store yield data, or developing systems to analyze the impact of different inputs on crop health.  Objectives for financial resources include achieving specific financial ratio benchmarks, paying off high-interest lines of credit, or saving to invest in a new piece of machinery.  Objectives to enhance and maintain human resources might involve hiring additional staff, offering career development opportunities, or offering incentives for loyal customers.

Developing A Business Plan

Using Figure 1, we encourage you to evaluate each of your farm’s key resources to help pinpoint any weaknesses in your resource base and subsequently identify areas in your operation needing improvement.  Business plans should begin by identifying strengths or weaknesses of current resources, assessing the implications of relative strengths (or weaknesses) in achieving business objectives, and then focus on setting up step by step plans to achieve those objectives.

Once your business plan has been created, considerations also need to be made for the timing of major organizational changes or substantial investments.  Both external shocks (e.g., macroeconomic uncertainties) and available operational slack must be considered to identify optimal timing to improve your resource base (Lippsmeyer, Langemeier, and Boehlje, 2024b).

In order to identify actions effective in making change, regular evaluations with consistent standards must be used to assess resource strength and progress made towards achieving objectives.  Continually assessing strengths and weaknesses of key resources and identifying potential improvements can prevent businesses from developing a ‘needs-based strategy’ which waits for major issues to arise, then scrambles to control damage.

Conclusions

This article has provided a discussion of key resources and risks associated with each.  By considering the strengths and weaknesses of your resource base, combined with the appropriate timing for investments, you will be better equipped to develop an effective business plan.  Using the tools provided in this article, we prompt you to critically assess your farm’s key resources and develop a business plan which progresses from your current resource base to achieving business objectives.

Claycomb, C. and C.L. Martin, C. L. (2001). “Building Customer Relationships: An Inventory of Service Providers' Objectives and Practices.” Marketing Intelligence & Planning, 19 (6). https://doi.org/10.1108/EUM0000000006109

Lippsmeyer, M. and M. Langemeier. (2023). “ Agility and Absorption Capacity .”  farmdoc daily (13):75, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, April 24.

Lippsmeyer, M., M. Langemeier, J. Mintert, and N. Thompson.  (2023). “ Resilience to Strategic Risk .”  farmdoc daily (13):115, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 23.

Lippsmeyer, M., M. Langemeier, and M. Boehlje.  (2024a). “ Integrated Risk Management: Developing an Asset-Based Business Strategy .”  farmdoc daily (14):54, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 18.

Lippsmeyer, M., M. Langemeier, and M. Boehlje.  (2024b). “ Key Resources Determining the Future of the Farm .”  farmdoc daily (14):60, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 27.

Olsen, E. (2007). Assessing Your Business and Its Capabilities. In Strategic Planning for Dummies (pp. 121-140). Indianapolis: Wiley Publishing, Inc.

Spender, J., and R. Grand, R. (1996). Knowledge and the Firm: Overview. Strategic Management. https://doi.org/10.1002/smj.4250171103

Vanhuyse, F., A. Bailey, and R. Tranter. (2021). "Management Practices and the Financial Performance of Farms." Agricultural Finance Review, 81(3) . https://doi.org/10.1108/AFR-08-2020-0126

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