Agribusiness business development plan

1. WRITING AGRIBUSINESS PLAN
BOLADE AGBOLA

2. LEARNING OBJECTIVE
At the end of the training session each
participant should be able to:
1. write an agribusiness plan
2. analyze an agribusiness plan
3. use the business plan to establish a new farm
or expand an existing farm business
4. use business plan as part of the performance
management tool

3.  Role of agriculture in the economy
1) Contribution to Gross Domestic Production
(GDP)
2) Source of foreign exchange
3) Source of employment
4) Raw materials for industries
5) Provision of food for the teeming population
6) Market for the industrial products
OVERVIEW OF NIGERIAN
AGRICULTURE

4. CONTRIBUTION TO GDP
• Agriculture between 2010 and 2014 was
responsible for over 41% of the GDP which had
been growing at average of 7% per annum
during the period
• In April 2014 Nigeria’s GDP was rebased using
2010 factor price. Based on the rebased GDP
,Agriculture which was the biggest sector now
weighs around 23.3% out of the $510billion or
N80.2 trillion GDP .

5. CONTRIBUTION TO GDP
• Services is now the largest sector of the
economy with about 50% .Others are
Information and Communication
10%,Industry and Construction 16%,crude
petroleum and natural Gas 11%

6. SOURCE OF FOREIGN
EXCHANGE
• Only O.88% of Nigeria’s foreign exchange is generated
by the Agricultural sector
• The oil sector accounted for about 96.5% of the
nation’s foreign exchange earnings and about 79.88%
of the budgetary revenue in 2014.This should have
dropped by over 60% due to declining petrol dollar
inflow as crude oil currently trades at below $40
• Agricultural produce however, account for 47% of the
non-oil sector foreign exchange earnings of 4.8% in
2013 .Others are: semi-manufactured goods 30.8%,
manufactured goods 15.2% and solid minerals 3.8%

7. SOURCE OF EMPLOYMENT
• The agricultural sector engages directly
and indirectly about 70% of the nation’s
workforce
• Nigerian farming population are ageing
and conscious efforts have to be made to
replace them with college trained farmers

8. RAW MATERIALS FOR INDUSTRIES
• Agriculture supplies raw materials for
industries involved in fiber and nutrition
(Nestle, Cadbury ,Indomine, Belloxi
Biscuits etc),energy industries for
production of ethanol and biodiesel
,pharmaceutical and health products

9. PROVISION OF FOOD FOR THE TEEMING
POPULATION
• In 2012 FAO estimated Nigerian dietary energy
requirement at 1,730kcalper person per day
based on 2008 survey .Global average is
1,800Kcalperperson.
• Nigeria according to FAOSTAT 2010 produced
156.09million tonnes of agricultural products
which constitute 22.27 percent of the
agricultural commodity production in Africa.
Egypt came second with 12.14 % and South
Africa third with 7.17%

10. MARKET FOR THE INDUSTRIAL PRODUCTS
• Agriculture serve as market or source of
demand for industrial goods like fertilizer,
herbicides ,pesticides, and machinery like
tractors ,harvester etc and a variety of
consumer goods

11. OTHER FACTS ON NIGERIAN
AGRICULTURE
• Small scale farmers cultivating less than 2
hectares constitute over 90 percent of Nigerian
farming population according to FAO Survey in
2008
• Nigeria has a land area of 91million hectares.
90.10 percent of it or 82m is cultivable while only
42% or 38m ha is under cultivation
• Nigeria’s fertilizer consumption of 7-8kg is one of
the lowest in the Sub-Saharan Africa
• Less than 10 % of land in Nigeria is irrigated so
Nigerian agriculture is rain-fed

12. OTHER FACTS ON NIGERIAN
AGRICULTURE
• Nigeria spends only about 3% of its
National budget on agriculture .This is
against minimum normative level of 10%
by 2010 agreed by African Union at
Maputo in 2003.
• The Land Use Act 1978 established a
uniform tenure system in Nigeria and aim
to make land available for development by
individuals, institutions and government .

13. OTHER FACTS ON NIGERIAN
AGRICULTURE
• The law gave State and local governments
power to take over and assign undeveloped
land based on public interest with
compensation for only development on the
land
• Major crops grown in Nigeria include beans
,sesame, cashew nuts, cassava, cocoa
beans ,groundnuts, gum arabic, kolanut,
maize, melon, millet ,palm produce,
plantains, rice, rubber, sorghum, soyabeans
,potatoe and yam.

14. OTHER FACTS ON NIGERIAN
AGRICULTURE
• The biodiversity of Nigerian climate is
able to support production of variety of
livestock,fishery and forestry in the country

15. ENTREPRENEURSHIP AND AGRICULTURAL
PROJECT CONCEPTUALIZATION
• ENTREPRENEURSHIP
Agricultural business originate like any other business
when an entrepreneur recognizes a business
opportunity. He may chose to carry out the
business in his name or create an institution to
pursue it (registered business name, limited
liability company or partnership or cooperative),
assemble the required resources (land, labour
and capital), implement a written and practical
business plan (feasibility report), and assume the
risks and rewards associated with the venture .

16. ENTREPRENEURSHIP AND AGRICULTURAL
PROJECT CONCEPTUALIZATION
• If the farm business is successful, the rewards are
many and could include wealth, fame,
recognition; etc. Every business passes through
five basic business cycles of start-up, growth,
shake-out, maturity and ageing. Should the farm
business fail due to crop failure in crop
production or disease outbreak on his poultry
farm in case of livestock farming he may lose his
home if pledged as collateral, have to change his
lifestyle and may even lose some liberty if
declared bankrupt.

17. A TYPICAL ENTREPRENEURIAL
CYCLE

18. ATTRIBUTES OF ENTERPRENEURS
They
• See opportunities where others see problem
• Never give up. If they fail they learn from their mistake and try
again
• Are always trying something different or learning something new
• Do not stop when they encounter a problem. To them ,problems
are simply puzzles to solve
• Like to be in control of a project from start to finish
• Want to be in control of their destiny and refuse to let someone
else decide their success
• Have confidence in their skills and abilities
• Work hard at what they do because they love doing it

19. STARTING A BUSINESS – BASIC
QUESTIONS
1. What is the venture about?(vision and
mission statement)
2. Where should it go? ( objective and
goals).Objectives give the direction while
goals provides specific and set the time table
3. How will it get there? (growth strategy)
4. What does it need to get there? (people,
resources)

20. STARTING A BUSINESS – BASIC
QUESTIONS
5. What structure is best? (organizational
capabilities )
6. How much money does it need and when?
(financing strategy ie equity and debt )
7.How will it recognize the final destination?
(vision of success)

21. STAGES OF ENTREPRENEURAL
DEVELOPMENT
1 Opportunity Recognition:
This is the dream stage or gestation period
when all pre-start analyses are done .Duration
could be a few days to 10 years or
indeterminate for those who remain forever
considering entrepreneurs. Research must be
done at this stage to understand the
dimension of the opportunity and decision
taken on its attractiveness or otherwise.

22. STAGES OF ENTREPRENEURAL
DEVELOPMENT
2 Opportunity Focus:
This is the stage at which decision is taken on
the chosen enterprise after so many ideas have
been considered . Farm business idea could be
on production, processing, marketing or
distribution. This is a sanity test, i.e. a go or no-
go stage. The initial focus of a business or
company is narrowly defined and success leads
to branching out, which could be by vertical or
horizontal integration .

23. STAGES OF ENTREPRENEURAL
DEVELOPMENT
3 Commitment of resources
The commitment of resources starts with writing
of the business plan. This is the only way for the
entrepreneur to understand the business and
demonstrate the desired commitment. The focus
of the business is usually established at this level
and this goes a long way in promoting successful
execution of the business plan. The usual practice
is to contract this out to a consultant

24. STAGES OF ENTREPRENEURAL
DEVELOPMENT
..
4 Market Entry:
This is a period the business is adjudged good
enough for the entrepreneur to choose
between a capital infusion from outside
sources for growth or remain small with self-
financing

25. STAGES OF ENTREPRENEURAL
DEVELOPMENT
5 Full Launch and Growth:
This is a stage the entrepreneur must choose a
particular high growth business strategy or
remain a small business operating as a sole
proprietor. Most small businesses will remain
small because not all small businesses can
become big companies..
This is because there is just not enough room in
the market for growth as their production and
management are not scalable

26. STAGES OF ENTREPRENEURAL
DEVELOPMENT
Some businesses are not scalable because the
challenge will be too great for the
management to cope with
6 Maturity and Expansion:
The business at this stage is mature and
cruising as a market leader. Growth here is
through professional management and it
could be by global expansion, mergers, and
acquisition because of availability of cash.

27. STAGES OF ENTREPRENEURAL
DEVELOPMENT
7 Liquidity:
This is the harvesting stage when value created
at the previous stages is realized through a
business exit strategy such as initial public
offer (IPO) or acquisition by a larger public-
traded company. The opportunity to exit is
one of the leading motivators for
entrepreneurship

28. BUSINESS /PROJECT CYCLE
The components of a business/project cycle are
• Business/Project identification
• Preparation and analysis
• Appraisal
• Implementation
• Evaluation

29. BUSINESS IDENTIFICATION
• First stage is to identify potential business
• Sources could include consultants ,market
trend ,import and export statistics

30. PREPARATION AND ANALYSIS
• It includes all the works necessary to bring the
business to a point in which careful review or
appraisal can take place
• A business plan or feasibility report will be
required and it should provide enough
information for deciding to begin more
advanced planning
• Consultants can be required at this stage
depending on the scope of the project

31. APPRAISAL
• This is critical for the bank or investor in the project
The essence is to reexamine every aspect of the project
plan to assess whether the commitment to deploy
resources is appropriate and sound .
• New information may be required if the specialists on
the appraisal team feel that some of the data are
questionable or some of the assumptions are faulty.
• If sound ,the business may be financed .If otherwise it
may be rejected or new information requested for

32. IMPLEMENTATION
• This is the most important part of the project
cycle
• The better and more realistic a project plan is,
the more likely it is that the plan can be
carried out and the expected benefits realized.
• Implementation phase can be divided into
three different time periods namely
investment /disbursement period
,development period and life of the project

33. EVALUATION
This is the final phase in the project cycle.
• Essence is to examine elements of success and failure
in the project experience to learn how better to plan
for the future
• Its applicable to both on-going and completed projects
• Evaluation may be done by the entrepreneur himself
,his Consultant or the lender or borrower or both
parties jointly ie a concurrent evaluation . An
independent body in case of commercial farms such as
Consultants, a University or Research institute may be
engaged to do the project evaluation

34. EVALUATION
• Evaluation should reveal how to improve the
appropriateness of each aspect of the project
design so that plans for the project
implementation can be revised if the project is
ongoing and so that future projects can be
better planned if the project evaluated has
been completed

35. BUSINESS SET UP
• The main form of business set up are
• Sole proprietorship
• Partnership
• Limited liability company
• Cooperatives

36. SOLE PROPREITORSHIP
SOLE PROPRIETORSHIP BENEFITS DRAWBACK
•You are the only person
involved
•Usually a small business
with few or no employee
•You have no separate legal
status from the business
•Any profits are yours
•Very easy to set up
•Not expensive to set up
•There are some tax
benefits .
• You carry all the risks
•You and your business are
the same .You are
responsible for all the
debts .This means the bank
can seize your assets such
as your house and your car
if you are in default

37. PARTNERSHIP
PARTNERSHIP BENEFITS DRAWBACK
You and one or more
people are involved in
operating the business
•Easy to set up
•All partners contribute the
skills ,time, knowledge and
assets
•There are some tax
benefits
•Disagreement between
partners can cause
problem – Written
Partnership agreement
recommended
•Because all the partners
are equally responsible for
debts ,a bad decision made
by a partner means all the
partners will pay for it

38. LMITED LIABILITY COMPANY
LIMITED LIABILITY
COMPANY
BENEFITS DRAWBACK
• You and your business are
two separate entities
• This setup is often used
by owners with a lot of
assets or debts
•Because you are separate
from your business you are
only responsible for the
personal assets you use as
security for the business
,The business is responsible
for everything else
•There are some tax
benefits
•More expensive and
complicated to set up
•There is more paperwork
to complete on a regular
basis and more regulators
you need to comply with.
Audited account ,annual
returns

39. COOPERATIVES
Cooperatives Benefits Drawback
Union of persons formed
for the production and
marketing of goods for
their common benefits
Its voluntarily owned and
controlled by its members
and operated for them and
by them on non-profit and
cost basis
There are some tax
benefits
Commitment of Leaders
and majority investors
tend to wane after they
have been served and so it
becomes difficult to keep it
going

40. SOURCES OF FUNDING FOR
AGRIBUSINESSES
1. Personal savings
2. Family or friends
3. Bank
4. Angel Investors
5. Venture capital
6. Government grant
7. Franchise
8. Cooperatives
9. Grant

41. WHAT DO LENDERS LOOK FOR IN AN
AGRIBUSINESS PLAN
What lenders and investors want to see in
agribusiness plan are indicated in the 5 Cs of
credit which are :
1. Character
• Can you provide good personal references,
employment references and credit reference
• Can you show that once you take obligation you
will see it through to the end
• Can you show you have the skills, knowledge and
experience needed for the business

42. WHAT DO LENDERS LOOK FOR IN AN
AGRIBUSINESS PLAN
2. Capital/cash
• Do you have any cash to towards the business?
No one will give you 100% of the financing
• A business is a risk and that risk must be shared
3. Collateral
• These are assets you own that will secure the
loan .A lender want to see the real value of the
asset in case it has to be sold to pay the debt

43. WHAT DO LENDERS LOOK FOR IN AN
AGRIBUSINESS PLAN
4. Capacity
• Will there be enough profit to make the loan payments in
addition to the operating expense ,wages and living
expenses ?
• Can the business generate sufficient profits for the
investors to share and when?
5. Conditions
• What are social conditions of the area ? What is the
population. Can the business be successfully carried out in
the environment ?
• What are the economic conditions ?Is there a high
employment rate? Is the economy growing or contracting ?
• What laws and regulations could affect business

44. WHAT DO INVESTORS LOOK FOR IN A
BUSINESS VENTURE

45. CONCEPTUALIZING AGRIBUSINESSES
Agribusinesses can be conceptualized from all
segments of the agricultural value chain which
are :
• Farm Input or supply;
• Farm production;
• Farm storage, processing and
• Distribution.

46. CONCEPTUALIZING AGRIBUSINESSES
1 Businesses that can be conceptualized from
the farm input/supply component of
agribusiness value chain include: land
clearing, transportation, agro input supplies
(fertilizers, herbicides, pesticides, livestock
feed, drugs), utilities (water, electricity, gas,
etc},packaging (sacks, cartons ,crates, bags),
etc. Traditional farm inputs such as land,
capital, water and management are possible
sources of agricultural business

47. CONCEPTUALIZING AGRIBUSINESSES
2 The farm production value chain can generate
projects in crops, livestock, fishery, forestry
and wildlife/tourist enterprises
3 Marketing for the processed products and
farm sector could produce projects in areas of
milling, food processing, textile
manufacturing, canning, packaging,
preserving, brewing and distilling.

48. BUSINESSES FROM AGRICULTURAL
VALUE CHAIN
•Farm Machinery
•Seed. Equipment .Fertilizer. Transport.
Power ,Feed. Pesticide. Herbicide
FARM INPUTS
SUPPLY
• LIVESTOCK (Cattle, Sheep ,Goat)
• , Poultry, Piggery)
• CROP (Cocoa ,Oil Palm, Yam
,Cassava,Maize,Vegetables)
• Fishery (Tilapia,Cat Fish)
• Wildlife (Teak,Mahogany)
FARM PRODUCTION
• Cold Store, Silos, Depot
STORAGE
• Canners. Brewers. ProcessorsPROCESSING
• Processed food,Non processed
food.Resturants,Soap,Textiles,Wood
DISTRIBUTION

49. RISKS INHERENT IN AGRICULTURAL
BUSINESSES
•Production and yield risk
• Price and market risk
• Lack of diversification
• Seasonality

50. MODULE 2

51. WRITING AN AGRIBUSINESS PLAN
Purpose of writing agribusiness plan or feasibility report are
• To facilitate objective, critical and unemotional look at the
viability of the business.
• To serve as an operating tool for managing the business
towards its success; and
• To serve as a means of communicating the business ideas
to third parties such as investors, and bankers for the
purpose of raising finance.
A business plan indicates what the farm business hopes to
accomplish and how it hopes to accomplish those dreams.

52. AGRIBUSINESS PLAN
• The stakeholders interested in farm business plans are
i. The management team – roadmap or blue print for
actualization of organizational goals and objective
ii. Equity providers (Investors) – demonstration of ability
to generate acceptable profit levels (return on
investment) over time
iii. Debt providers(Bankers and other financiers)-ability
of business to repay principal and interest and
strategy to deal with financial risk
iv. Government and regulatory agencies – Could be used
to apply incentives (Duty waivers, subsidy ,price
support) or regulation

53. AGRIBUSINESS PLAN
Agribusiness plan should address the following
basic issues
• Financial – Can the business make a profit
• Marketing – Is there a market? How much can
you sell?
• Management – Does the management team
have the skill?.
The presentation quality and financial analysis is
crucial if Agribusiness plan is to be used to raise
money from outside but could be less formal if
being used internally

54. AGRIBUSINESS PLAN
The prospective investor should be able to
derive the following from the agribusiness
plan
• Amount and type of financing needed
• Forecast profitability and investor return on
the investment
• Forecast cash flow indicating liquidity and
ability to repay debt or pay dividend if equity
investment

55. BASIC QUESTIONS AN AGRIBUSINESS
PLAN MUST ANSWER
• Who are the customers?
• How many are there?
• How do we reach them?
• Why are we in business ?
• Do we produce for a commodity or specialty
market ?
• What is the status of our business (ie start-up,
expansion, takeover etc)?

56. BASIC QUESTIONS AN AGRIBUSINESS
PLAN MUST ANSWER
• What type of business are we in (merchandising,
manufacturing, processing, production, service
etc )?
• What phase of the business cycle are we in
(embryo, growth, mature, declining, starting new
etc)?
• When will our business start, and operate(hours,
seasonal or cyclical)?
• Is there anything about this particular business
that gives an advantage or disadvantage

57. OUTLINE OF AN AGRIBUSINESS PLAN
 Cover Sheet: Business Name, Address, Phone
Number, Principals
 Executive Summary or Statement of Purpose
 Table of Contents
1. Section One: The Business
A. Description of Business (History of the
company ,agribusiness , organizational
structure and background)

58. OUTLINE OF AN AGRIBUSINESS PLAN
B. Agribusiness Products/Services (farm technical
plan - cropping or livestock)
C. Market Analysis
D. Marketing Plan
E. Location
F. Competition
G. Management and Operations
H Personnel
I Business Feasibility

59. OUTLINE OF AN AGRIBUSINESS PLAN
2 Section Two: Financial Data
A. Projected Financial Statements
• Income Statements
• Cash Flow Statements
• Balance Sheets
• Assumptions to Projected Financial Statements
B. Break Even Analysis
C. Gross margin Analysis
D. Sources and Uses of Funds

60. OUTLINE OF AN AGRIBUSINESS PLAN
3. Section Three: Supporting Documents
Historical financial statements , projected
financial statements, tax returns, resumes,
reference letters, personal financial
statements, facilities diagrams, letters of
intent, purchase orders, contracts

61. EXECUTIVE SUMMARY
The executive summary should address key elements
of the business and provide an overview for the
directors and those interested in funding the business.
It should contain
1. Concise description of the business and market for its
products
2. Description of the management team emphasizing
their relevant experience and special skills
3. Summary of the financial projection for 3 to 5 years
4. Purpose of the business plan which could be to obtain
funding for the business.

62. THE BUSINESS
The above is only necessary while preparing the
business plan for prospective investors and
lenders .They need to know about the history and
origin of the business. It should contain
1. When the business was founded, progress to
date, the founding environment ,evolution as
sole proprietorship, partnership, cooperative or
limited liability company. Role played by key
individuals ,their business experience and
historical account of the business

63. THE BUSINESS
2. Organization of the business as related to distribution of
equity and returns .If limited liability company ,the
capitalization, classes of stock, shares outstanding and
major stakeholders .If cooperative, nature and extent of its
capitalization, and patronage earnings distribution policy.
3. Summary of past loans and investment in the firm by third
parties
4.Review of products/services the company has developed or
marketed from inception
5. Reasons to believe that the company’s past or historical
performance is not a true reflection of its potential if fresh
funds are being raised for expansion of the business

64. AGRIBUSINESS PRODUCT /SERVICE
• This involves definition of what the business
want to produce and or market .The business
plan must give summary of the technical
process and requisite government approvals
such as licenses, inspections, permits, If the
business plan is to be used to raise capital
then it must be in simple language that a lay
person can understand ,The benefits of the
individual products or services planned must
be stated

65. AGRIBUSINESS PRODUCT /SERVICE
• For most businesses, the products or services are not
totally unique. If yours are, take advantage of this while
you can and plan for the competitive battles that will
come.
• If your products or services are not unique, you must
find a way to position your products or services in the
mind of your customer and to differentiate them from
the competition. Positioning is the process of
establishing your image with prospects or customers.
Areas of positioning includes : highest quality, lowest
price, wider selection, best customer service, faster
delivery, etc

66. MARKETING AND SALES PLAN
• The current market and market opportunities must be
comprehensively described .If product or service is
generically new some reference to the market research
undertaken would be necessary. For start-ups or
existing businesses, market analysis is important as the
basis for the marketing plan and to help justify the
sales forecast. Existing businesses will rely heavily on
past performance as an indicator of the future. Start-
ups have a greater challenge - they will rely more on
market research using libraries, trade associations,
government statistics, surveys, competitor observation

67. MARKETING AND SALES PLAN
Some of the questions that should be answered by the plan
are :
• Who are the customers ? geographic, demographic and
psychographic(study personality, values, opinion, attitude
interests and lifestyle) characteristics
• What is the historical status ?
• Where are your present and future markets ?
• At what level does your firm make marketing decision?
• How do you sell your product and services ?
• What characteristics are most critical to your production
process and successful sale of your firm’s products or
services ?

68. MARKETING AND SALES PLAN
• What is the size of the market? Is it growing?
• Any prospect for export?
• What is (will be) your share? How will your
share change over time?
• What is the industry outlook?
• Are there segments of users who are under-
served by competition? Do any of these
under-served segments present opportunities

69. MARKETING AND SALES PLAN
• Does the market have distinctive characteristics ?
Agribusinesses are unique in areas of seasonality,
perishability and cyclicality.
• What is the competition in the business ? What is the
market capacity for the product or service and what is
the current market share of the business?
• What market niche the firm wants to occupy and the
strategy to employ?
• Other important features in the marketing plan are
channels of distribution, sales compensation plan,
pricing strategy, promotional concept ,distributional
plan

70. MANAGEMENT
• The experience and competence of the management team
must be addressed in the agribusiness plan. The following
must be clearly stated
• Management structure
• Job description for important positions
• Minimum qualification for each position
• Compensation for each open position and how they will be
filled .
• Resources outside the company are available to enhance
management performance
The interest of prospective investors or lenders is the
assurance that the management team is well qualified and
capable of implementing the overall business plan.

71. FINANCIAL DATA
The purpose of financial projections are to :
1 Establish the profit potential of the business, given reasonable
assumptions
2 Determine how much capital the company needs and how it
will be used
3 Demonstrate ability of the business to generate the cash to
operate and re-pay loans
The financial projection typically follows the written section and
the strategies .It provides opportunity to estimate the
financial impact of the proposition and strategies .

72. FINANCIAL DATA
The main projections for agribusiness planning are
projected Income Statements, Balance Sheets, and
Cash Flow Statements.
It is usually recommended that these projected
statements be on a monthly basis for at least the first
twelve months or until the business is profitable and
stable. Activity displayed beyond the monthly detail
may be in summary form (such as quarterly or
annually.) The forecast period for most business plans
is two to three years. There are software applications
for doing the projections although one can do it with
Excel spread sheets . The key element is the
correctness of the assumptions used in the projections

73. STEPS IN FINANCIAL PROJECTION
1 Estimate fixed asset requirements for the first year.
Include Land, buildings, leasehold Improvements,
equipment, and vehicles.
2 Estimate any start-up or one-time expenses such as
legal fees, licenses, and initial marketing costs which
are required for commencement of business.
3 Define each “unit” of your product or service and
estimate the selling price and direct cost per unit using
the format in the table below .
4 Estimate sales by month for at least one year. (Unit
sales price times the number of units.) Consider how
start-up, marketing, and seasonal factors affect sales

74. STEPS IN FINANCIAL PROJECTION
5 Estimate monthly cost of sales and gross profit based
on the percentages of sales calculated above. Use a
weighted average if multiple product lines.
6 Estimate and itemize fixed expenses by month for at
least one year. Include things like rent, insurance,
utilities, salaries, marketing, legal/accounting, etc.
Determine all categories which apply to your business,
but don’t include expenses here that are in “cost of
goods (services) sold.”
7 Describe the amount of inventory (if any) required to
support the sales forecast. Express in number of days
sales or turnover if possible.

75. STEPS IN FINANCIAL PROJECTION
8 Describe your credit, sales, and collections
policies. If you will make sales on credit, estimate
the number of days after the sale before the
average customer pays.
9 Describe how fast you must pay your vendors for
any items you will purchase.
10 Also estimate obligations for Income Taxes. Staff
PAYE, Withholding tax and corporate tax
Businesses already in operation will need the
latest Balance sheet

76. FIXED ASSET/START-UP EXPENSE LIST
:
Fixed Asset Description: Cost
Land/Building ____________________________________
Farm Machinery
Equipment and/or Vehicles ____________________________________
Leasehold Improvements ____________________________________
(Other)_____________________________
____________________________________
Start-up Expense Description:
Legal/Organization Costs ____________________________________
Initial Marketing & Promotion ____________________________________
Licenses and Permits ____________________________________
Beginning Inventory ____________________________________
(Other)_____________________________
____________________________________
Total Fixed Asset and Start-up Expenses: _______________________________

77. UNIT SELLING PRICE AND COST
ANALYSIS
Product or Service :
A. Selling Price : _____________
less
Direct Costs:
Farm Inputs (Seed, Fertilizer, Herbicides) _____
Family Labor _____
Hired Labour ______
(Other) ______
_____________________ ___________
B. Total Cost per Unit ____________
C. Unit Gross Profit (A minus B) ____________
D. Gross Profit % (C divided by A) ____________

78. AGRIBUSINESS FEASIBILITIES
• A typical agribusiness plan must showcase the
main types of business feasibilities . These are
• Market feasibility
• Technical feasibility;
• Financial feasibility.
• Social and economic feasibility.
The business plan must also contain
environmental impact analysis of the business .

79. MARKET FEASIBILITY
The purpose of conducting market
feasibility is to assess sales potential of the
products
Typical farm product could be
1. A new or novel project which is not
available anywhere in the world. Most
projects that originate from research
findings fall into this category. An example
is introduction of yellow maize due to its
richer nutritional value to farmers

80. MARKET FEASIBILITY
. 2 A project/product which is new in an
economy but has been successfully produced
in some other economies. For instance
introduction of soya beans cultivation in
Nigeria from Brazil
3 A project/product that is an addition to the
capacity in the economy. A typical example is
broiler production.

81. MARKET FEASIBILITY
The main elements of market feasibilities are
– General economic condition
– Demand projection;
– Supply;
– Identification of critical success factors;
and
– Estimation of demand-supply gap.
•

82. MARKET FEASIBILITY
General economic conditions include :
• Gross domestic Product (GDP)
• Per capital income
• income disparity,
• rate of urbanization,
• population growth rate,
• literacy level,
• money supply and
• government spending

83. MARKET FEASIBILITY
These are the determinants of the demand
potential of the goods and services to be
produced and must be analyzed

84. MARKET FEASIBILITY
The factors that must be taken into
consideration in demand projection are as
follows:
• The target market profile;
• The influencing factor. Product demand
usually has influencing factors. For instance,
demand for egg is a derived demand for yam;
whatever happens to yam production affects
demand for egg;

85. MARKET FEASIBILITY
Local, regional or export market potential. There
was an upsurge in cassava production when the
Federal Government took control of its export
drive and prescribed that local wheat flour millers
must blend it with not less than 10% cassava flour
• Infrastructural facility which may facilitate or
constrain demand are power, roads, transport
facilities

86. MARKET FEASIBILITY
Supply Estimation
In writing business plan, it is necessary to
estimate the supply pattern of the goods and
services to be produced.
• Who are the major producers
• What are their market share.
• What is the past trend of supply, and
• Can future supply be extrapolated from the
available information?

87. MARKET FEASIBILITY
• The other factors that would determine
supply estimation include projects being
undertaken in the country and import
possibility which is determined by government
policy, exchange control, import tariff,
international prices and other entry barriers

88. MARKET FEASIBILITY
Critical Success factors
All projects have peculiar features which could determine
their success or otherwise.
The critical success factors could be location, availability of
raw materials, skilled or unskilled labour, power,
transportation, location, etc. Power is a critical success
factor for most food processing companies. Where there
are alternatives in form of power generator, the duration of
use in place of supplies from the national power grid may
determine the profitability or otherwise of the enterprise.
Such variability in source of power supply has to be
factored into the projection to make it realistic.

89. MARKET FEASIBILTY
The demand and supply gap
• The demand and supply gap is arrived at after
estimation of demand and supply of the product.
For most agricultural production, demand growth
is based on growth in population, urbanization
and per capital consumption while supply is
based on domestic production and imports.
Market feasibility of a product or service is said
to be positive if supply deficit is considered wide
enough to accommodate the proposed output of
the new project .

90. MARKET FEASIBILITY
• The usual practice in writing a business plan
is to study the strength and weaknesses of
the existing producers to identify values that
could be created and leverage on these in
conceptualizing a new project. Processed
Cashew nut and Plantain chips are examples
of value addition

91. TECHNICAL FEASIBILITY
Some of the factors that need to be evaluated in assessing
technical feasibility of agricultural projects are as follows:
• Availability of improved seeds, seedlings, fertilizer and
herbicide for crop production or feed for livestock rearing;
• Availability of commercially exploitable production
technology for agricultural businesses in processing value
chain
• Production process. Cropping Plan and cultural practices,
i.e. land clearing, ploughing and harrowing, herbicide
application, weeding, fertilizer application, harvesting,
storage and transportation for crop farming;

92. TECHNICAL FEASIBILITY
• Livestock stocking plan and cultural practices,
i.e. breeding, rearing and fattening
techniques
• How suitable is the production technology,
especially for available quality of raw
materials, power, skilled manpower, weather
condition, quality of water and other factors
of production;

93. TECHNICAL FEASIBILITY
• Research findings application to production
process;
• Adoption of technology in the local environment;
• Availability of raw materials, skilled and unskilled
labour, etc.
• Availability of infrastructure like power, water,
roads and transportation for raw materials and
finished products;
• Requirement of plant and equipment and
fabrication facilities

94. TECHNICAL FEASIBILITY
• How feasible is the production mix? What are the
possibilities of joint product and by-products? Melon
intercrop in a maize farm could be an additional source of
income. A fish farm could complement a poultry farm for
use of the poultry dung to feed the fish; We now have
hydroponics ie soiless gardening
• Facilities for waste disposal. What facilities are available for
waste disposal and what are their environmental impact ?
In handling disposal or use of poultry dung in a poultry
farm, the commercial side should be studied
simultaneously with the technical feasibility of the means
of disposal.

95. FINANCIAL FEASIBILITY
• Financial feasibility assessment involves a
detailed financial analysis. This is where the
demand and prices derived from market
feasibility and the project cost and operating
cost obtained from technical feasibility report
are combined to determine the viability of the
project.

96. FINANCIAL FEASIBILITY
• The financial bottom line is computed when tax
implications from the existing tax laws and the
cost of funds for executing the project are
factored in. The financial analysis should
ascertain the ability of the project to generate
sufficient cash flow to fund its operational
expenses, meet its debt service obligation, and
provide returns that meet if not surpass
shareholders’ expectations.

97. FINANCIAL FEASIBILITY
• The assumptions, workings and calculations
used in determining financial feasibility of
projects have to be properly articulated. Some
of them are briefly described below:
• The projections must be derived from realistic
prices of products while costs of inputs are
arrived at from actual capacity and
production .

98. FINANCIAL FEASIBILITY
• Period of estimation must be certain and
determined by the production technical plan
,product life cycles, business cycle , forecast
sources of funding and cost if debt is essential.
• Alternative sources of financing should be
evaluated and choice based on structure, cost
of funds and repayment arrangement

99. FINANCIAL FEASIBILITY
Some of the working schedules that needs to be carefully
articulated are
• Interest and loan repayment schedule;
• Working capital schedule .Projection must adequately
provide for inflation to ensure optimal utilization of the
fixed assets;
• Amount and source of working capital loan, if required;
and the repayment schedule
• Depreciation schedule for company and income tax.

100. FINANCIAL FEASIBILITY
• The three major financial statements that
needs to be part of the business plan are :
– Profit and loss accounts(Statement of
comprehensive income) of the company;
– Balance sheet (Statement of Financial Position) of
the company; and
– Cash flow statements (Statement of cash flow) for
the proposed project

101. FINANCIAL FEASIBILITY
• The basic financial parameters used to
determine viability of a business plan are:
interest coverage, debt-service coverage, net
present value analysis and internal rate of
return.

102. FINANCIAL FEASIBILITY
• Interest Coverage:
Interest coverage measures the capacity of the
business to generate sufficient cash flow to meet
interest obligation. It indicates the ability to meet
interest payment obligation in terms of safety
and timeliness. The lower the ratio the more the
company is burdened by debt.
Interest Coverage =
Profit After Tax + Depreciation +Interest
Interest Expense

103. FINANCIAL FEASIBILITY
• Debt-Service Coverage: The Debt Service Coverage
Ratio is more interesting to lenders because in
addition to interest service, the principal sum
obligation is factored into its calculation .The ratio is
therefore a good measure of safety of the lender’s
money. For most businesses, a ratio of 1.5 is
considered good and an indicator of the company’s
financial strength.
• Debt-Service Coverage Ratio =
Profit After Tax +Depreciation +Interest
Interest +Principal Sum Repayment

104. FINANCIAL FEASIBILITY
Net Present Value: Net Present Value (NPV)is
defined as the excess of present value of cash
inflow over present value of cash outflow of the
project .It is simply the PV of future cash flows
minus the initial outlay.
NPV = ∑ Cft- C
(1+k)n
Where Cft= Cash flow in time t ,C= Initial Cash
Flow, k = Discount Rate and n = Period

105. FINANCIAL FEASIBILITY
NPV is an indicator of how much value an
investment or project adds to a firm if the
project is appropriately risked. The decision
rule in project analysis is to accept the project if
NPV is positive and reject if NPV is negative. That
is
Accept project if NPV is greater than (>0 )
Reject project if NPV is less than (<0 )
Indifferent to project if NPV is equal to zero (=0)

106. FINANCIAL FEASIBILITY
• Where there are many projects, they will be
ranked according to their NPVs and selection
will be based on the ranking .Where we have
two mutually exclusive projects that cannot
be executed together because of technical or
other reasons, the one with the larger NPV
will be selected .

107. FINANCIAL FEASIBILITY
• Internal Rate of Return (IRR): Internal Rate of
Return is defined as the discount rate at which
Net Present Value is Zero. IRR is calculated by
trial and error or interpolation method starting
from a known positive IRR and negative IRR and
iterating until Zero NPV is derived. Decision is
arrived at by comparing IRR with the desired rate
of return. The decision rule is:

108. FINANCIAL FEASIBILITY
• Accept if IRR is greater than expected rate of
return.
• Reject if IRR is less than expected rate of return.
• Indifferent if IRR equals to expected rate of
return.
• IRR seems preferable in appraising projects
because of use of percentages .Unlike NPV which
is in figures, NPV and IRR give the same accept or
reject verdict for single projects. NPV and IRR
could give conflicting results for mutually
exclusive projects if time, size or duration differs

109. FINANCIAL FEASIBILITY
Profitability Index
Profitability Index (PI) or Benefit Cost (B/C) Ratio is
used to rank mutually exclusive projects with the
aim of choosing the best. Planting maize and
sorghum or cassava and yam together may be
considered mutually exclusive because timing of
planting and nutrient requirements are similar.
Profitability ratio is calculated by dividing the NPV
of the net cash inflow by the present value of
cash outflow.

110. FINANCIAL FEASIBILITY
Profitability Index (PI) = Present Value of Cash Inflow
Present Value of Initial Outflow
Decision rule: Accept if PI >1 Reject if PI <1 and Indifferent if PI
=1.
or
PI = NPV
PV of Cash Outflow
Decision rule; Accept if PI>0 Reject if PI <o and indifferent if
PI=0.

111. FINANCIAL FEASIBILITY
Sensitivity analysis
Sensitivity analysis is a technique in which the
sensitivity of profit (or net present value or
internal rate of return) to the change in one
particular factor of production is checked.
Sensitivity analysis is based on the concept that
only a few production factors require
management attention. A Feed miller who
requires power supplies from two sources to
produce would need to do sensitivity analysis
on the average cost of power from the two
sources.

112. FINANCIAL FEASIBILITY
• Power in this instance, just as other few
variable cost items for the farmer such as
price of maize to a feed miller, would make
a difference to the success of the business
Sensitivity analysis is also called ‘What if analysis ‘
because it involves recalculation of net present
value and internal rate of return if a particular
variable changes in price or quantity from the
original estimate and so it is a critical element of
project risk analysis

113. FINANCIAL FEASIBILITY
. The four ways of deriving sensitivity analysis
are
• The percentage change in income or
expenditure;
• Accounting break-even;
• Net present value break even; and
• Pay off matrix

114. SOCIAL AND ECONOMIC FEASIBILITY
Social and economic feasibility has to be evaluated on
projects embarked upon by government or
government agencies .Government may decide to
establish a fish fingerling production project in a fishing
community to stock their ponds and streams to create
sustainable employment for the fishermen in the
community and not necessarily for profit. Both
technical and financial feasibilities are however seldom
given much consideration in government projects,
although they have to be done.

115. ENVIRONMENTAL IMPACT ANALYSIS
• Environmental Impact Analysis (EIA) is expected
to be conducted on projects whose output or
activities could impact negatively on the
environment. The essence is to assess what
damage the project could cause to the
environment and what could be done to avoid
the damage or restore the environment to its
original state . A typical agricultural project that
needs environmental impact analysis is fish
farming .The water in the ponds has to be
evacuated periodically.

116. ENVIRONMENTAL IMPACT ANALYSIS
• The drainage in the neighbourhood must be
assessed to ensure it can accommodate the
water without damaging farms or properties
of the neighbours or create health hazard if
the farm is within area of human habitation.
Entrepreneurs must show interest in
environmental impact analysis because any
litigation by an aggrieved neighbour could
jeopardise timeliness and viability of the
project.

117. ENVIRONMENTAL IMPACT ANALYSIS
• The need to conduct EIA on agricultural projects
being funded by banks has become imperative in
the light of adoption of Sustainable Banking
Principles by Nigerian Banks at the instance of the
Central Bank of Nigeria in July 2012 .The
guideline on agriculture is to assist banks in the
identification and management of complex
environmental and social risks associated with the
provision of financial products and services to the
Nigerian agricultural sector and strategically
position agriculture as an attractive, rewarding and
sustainable business opportunity.
•

118. MODULE 3

119. FARM TECHNICAL PLAN
The farm technical plan is a key management strategy for farm
business. It is made up of cropping plan for a crop farm and
stocking plan for a livestock and fish farm.
A cropping plan is an essential planning tool for creating
and maintaining efficiency and timeliness of cropping to
meet harvest goals. The basic considerations in developing
and implementing cropping plan are.
• Land area to be cultivated;
• Types of crops to be grown and their life cycles;
• Planting schedule to meet production goals
• Soil test result to know structure and type of soil and
determine fertilizer requirement

120. FARM TECHNICAL PLAN
• Understanding of quality and value of inputs required,
i.e. seeds, seedlings, fertilizers, herbicides, labour for
all cultural practices, i.e. planting, weeding harvesting
and storage.
• In addition to some of the above considerations a
livestock or fish farm plan would require detailed
analysis of the following factors :
1. System of production which could be traditional or
modern,
2. The production goal,
3. Stocking schedule to meet production goal,
4. Types of breed,

121. FARM TECHNICAL FARM
5. Location,
6. Land ownership,
7. Equipment,
8 .Feeds and feeding,
9 .Medication,
10 Processing and storage facilities.

122. FARM TECHNICAL FARM
• The Farm Manager in addition to being
responsible for making the cropping plan for
crop enterprises and stocking plan for a
livestock or piggery or fishery enterprises
have to provide for farm equipment and
machinery

123. FARM TECHNICAL PLAN
• Farm mechanization is meant to substitute or
remove human and animal labour from the
farm and replace them with machines and
equipment thereby resulting in improved
productivity . Besides improving production
efficiency ,farm mechanization encourages
large scale production and improves the
quality of farm produce.

124. FARM TECHNICAL PLAN
• The decision on equipment to acquire or lease is
essential for farm budget planning and management .
Most projects that have challenges especially during
the growth stage is due to over investment in farm
machinery without commensurate provision for
working capital .Some of the problems militating
against farm mechanization in Nigeria are :illiteracy
,land tenure system that prevent large farm holdings,
lack of spare parts for maintenance, nature and
topography of land and level of income of farmers
which is low and create problem of affordability for
most farmers .

125. FARM FINANCIAL PLAN
Having formulated the farm plan, the farmer will
then subject it to analysis using the farm financial
tools which include:
• Gross margin analysis;
• Break even analysis;
• Farm budget;
• Management control.
The above tools are also used by lenders to
appraise agricultural lending proposals

126. FARM FINANCIAL PLAN
• Gross margin analysis is used as a planning
tool for a business with several enterprises .A
farm business typically consist of several
enterprises. A Poultry farm would consist of a
Broiler producing unit, Layer rearing unit and
Feed mill , Each unit is an enterprise which
will have cost specifically associated to it and
also other cost which are shared over the
total farm business.

127. FARM FINANCIAL PLAN
• Allocation of a portion of all farming cost to a specific
enterprise can be completely misleading when making
planning decision. It is desirable to do gross margin
analysis for each of the enterprises so as to know
which of them should be the main focus of the
business.
• The Gross margin of an enterprise is the difference
between the total cost of production and the variable
cost of production. Gross margin therefore measures
the contribution of that enterprise to farm profit.

128. Gross Margin Analysis for 1000 Broiler
Production
Naira Naira
Sales Revenue (900 broilers
. 1.35kgeach @N600 per kg
729,000
Less Variable Cost
Day old chicks 1000 @
N135 each
135,000
Feed 4kg per bird@ N40/kg
for 1000
160,000
Farm Labour ( N10,000 per
month for 2 months)
20.000
Medication N20 per bird
for 8 weeks
20,000
Less Total Variable cost 345,000
Gross margin 384,000

129. Farm Profit Determination from Gross
margin Analysis
The farm profit is derived by deducting the farm fixed cost
from the product of each of the enterprise gross margins.
• Farm profit = Gross margin of all the enterprises-fixed cost.
The accuracy and efficacy of using gross margin analysis in
farm management decision making depends on;
• Availability and accuracy of record of inputs and outputs;
• Accurate record of labour use on the farm by each of the
enterprises; and
• Availability of data on comparative standards on yields,
inputs and prices.

130. BREAK EVEN ANALYSIS
Break-even analysis is one of the very useful
agribusiness planning tools which should be of
interest to farmers .The break-even analysis
identifies the relationship between costs,
volume and profits . A farm business, in order
to make profits, must earn total revenue that
is in excess of total costs. The break-even
point is that level of production or sales where
total revenue equals total cost .

131. BREAK EVEN ANALYSIS
BE=PQ-FC-VC
=Q(P-VC)-FC
• At the break-even point, EBIT is zero . Setting EBIT =0 and denoting
the break-even volume at Q
Q(P-VC)=FC
Q= FC
P-VC
Break –even point Q = Fixed Cost
Revenue per Unit-Variable cost per
Unit
P = Price ,Q=Quantity FC =Fixed cost VC=Variable cost

132. Farm Budget
• Budgeting is a useful device for planning and
measuring performance of business. Farm budget
involves preparation of the technical plan in
terms of the area of crops and number of each
class of livestock to be produced and the method
of production. This is followed by estimation of
the expected cost and returns through gross
margin analysis of each of the farm enterprises.
Farm budget must be realistic and be technically
feasible. It must not be too optimistic and must
reflect past performance on the farm.

133. FARM BUDGET
• In arriving at the technical plan, the services of
various professionals in agriculture should be
used. Thus, an agronomist would be needed
to advice on crop combination, a soil scientist
on soil fertility, an animal scientist on suitable
breed of poultry or cattle to be reared, a
veterinary doctor on vaccines and medication
application cost, and an agricultural engineer
on appropriate tractor for the ecological zone
in which the farm is based

134. FARM BUDGET
• Farm budget forecast must be based on past
experience of input, output and prices. The
forecast must have a list of all capital
expenditure items, working capital items and
various sources of farm income . It is the
responsibility of the agricultural officer of the
bank while appraising lending proposals to
ensure that the capital items are appropriate
for the enterprise.

135. FARM BUDGET
• Working capital must be adequate and available for
optimal utilization of farm fixed assets, otherwise the
project will not be able to cover its cost and would
eventually fail .Farm project working capital gets
depleted by inflation which usually creeps in through
unforeseen factors such as depreciation of the
currency , escalation in interest rates , crop failure
,weather failure. etc There was a year when the price
of maize doubled because of weather failure. Many
poultry farms had challenges because they could not
recover their cost of production from the sales
proceeds of eggs, broilers and spent layers.
•

136. CASHFLOW BUDGET
• The cash flow budget is another useful tool for
planning the use of capital on the farm and
monitoring performance. A cash flow budget is
an estimate of all cash receipts and all cash
expenditures that are expected to occur during a
certain time period. Estimates can be made
monthly, bimonthly, quarterly, or annually and
can include non-farm income and expenditure as
well as farm items. Cash flow budgeting looks
only at money movement, though, not at net
income or profitability..

137. CASHFLOW BUDGET
• It provides answers to basic finance
questions such as how much financing will the
farm business require this year? When will
money be needed and from where will it
come? Cashflow budgeting as a planning tool
helps to avoid short-term shortages of cash

138. CASHFLOW BUDGET
A cash flow budget is a useful management tool because of
the following:
• It promotes articulation of a farm plan for the year.
• It provides the basis for determining if the envisaged farm
produce will generate enough income to meet all cash
needs.
• It helps to determine how much operating credit will be
needed and when.
• It enables projection of when loans can be repaid.
• It serves as a basis to compare actual cash flows with
projected cash flows.
• It is a useful tool for communicating farming plans and
credit needs to prospective lenders

139. CASHFLOW BUDGETING
On the long run, many fixed costs and
investments in fixed assets also vary with sales.
There are some items in the balance sheet,
however, which do not vary with sales. They
include intangibles, short-term and long-term
debt, minority items and capital. Interest may not
relate to sales because it has other determinants
such as amount of surplus cash, borrowing and
interest rates. For agricultural projects, the
forecast of cash flow must take into consideration
the nature of input and output relationship

140. CASHFLOW BUDGET
• . For most situations, sales is used as the
independent variable while all other items are
forecasted on the basis of their relationship to
sales. This is based on the tendency of all
variable costs and most current assets and
liabilities to vary directly with sales. A cash
flow drawn on a local variety yield rate of
cassava of 10 tons/ha is significantly different
from one based on improved seedlings that
yield 25 tons /ha..

141. CASHFLOW BUDGET
The cash flow projection is a good predictor of cash
management and financial health of the business
According to Dun & Bradstreet, about 85% of new
businesses in any given year fail, due to lack of working
capital, in other words cash management. The outlook
of business cash flow is the first symptom of financial
distress which eventually leads to bankruptcy when it
dries up. Only cash flow repays loans; so, bankers are
interested in monitoring its trend in order to take
remedial actions as may be necessary to safeguard
collection of their loans
.

142. CASHFLOW BUDGET
• The cash flow forecast can be prepared manually or
with a computer-based model or spreadsheet. The
most common approach is to use one independent
variable with the rest of the statements being
constructed on the basis of balance sheet and income
statement and expense items as dependent variables
Also, cyclicality and seasonality in input/output
relationship for agricultural business must be taken
into consideration. Other significant expenditure of the
farmer like school fees and income from non farm
activities should be incorporated into the cash flow
projection .

143. CASHFLOW BUDGET

145. PERFORMANCE MONITORING
• The progress of the farm is established through
the management control and monitoring reports.
The daily farm work organization is not sufficient
Performance levels should be checked regularly
against budgets. Receipts and payments recorded
must be compared with the cash flow forecast.
Project control involves the activities performed
to ensure that a project proceeds according to
plan and produce the desired results. This
involves reconfirming the farm business plan,
assessing performance and taking corrective
measures

146. PERFORMANCE MONITORING
Farm records are kept for the following purposes:
1. Performance Monitoring
2. Farm Management Decision Making
3. Preparation of Accounts
4. Credit Purpose
5. Insurance
6. Taxation
7. National Planning:

147. FARM RECORD
• The farm record for small and commercial farms should
comprise of the following:
• A bank current account that keeps the business and
personal transactions (and funds) separate;
• A monthly income and expense ledger;
• Production record to document production process
and the time cultural practices like planting, weeding,
fertiliser application and other activities were carried
out .For maize production, it will be necessary to
record date planted, batch by batch ,date fertiliser
applied and quantity, 1st and 2nd weeding, labour used
for weeding, date harvested, etc.

148. FARM RECORD
• An inventory or stock ledger for each of the enterprises
and assets, where appropriate. This is used to count
inventory items and value the business.
• A depreciation schedule for any purchased equipment
like tractors, vehicles, feed mill, etc., that is eligible for
depreciation for tax purpose.
• Pro-forma statements – a balance sheet(statement of
financial position) to determine net worth; an income
statement(statement of comprehensive income) to
determine net profit or loss.
• A cash flow statement to track the flow of funds.

149. MODULE 4
• CASE STUDY