Risk-Assessed Business
Planning for Small Producers



A Curriculum
Manual for
Teaching Business
Planning Skills to
Small Farmers
Multi-Institutional
Multi-disciplinary
Project Team Members





Dan Lyons, North Carolina A&T State
University
Marion Simon & Louie Rivers, Jr.,
Kentucky State University
Nelson Daniels, Prairie View A&M
University
Don West, National Program Leader for
Farm Business Management
Ken Stokes, Director, SRRMEC
Goal of the AEA Risk
Management Project Team


Develop a Risk
Management
Education
Curriculum Manual
for Small Farmers
Based on the
Texas Extension
Top Agriculture
Producer Series
The Risk-Assessed Business
Planning for Small
Producers Manual Includes:
Educational texts with references
 Lesson Plans and suggested presenters
 Overheads for use in presentations
 Case study of a diversified small farm
 Color-coded Transaction logs and
Spreadsheets that flow together

Risk-Assessed Farm
Business Planning
Farm business
planning develops a
roadmap for the
management of the
operation that helps
all parts of the farm
to flow smoothly
Chapter 1:The Roles of
Farm Business Planning:




Identify farm goals
Inventory the farm
resources
Assess the farm
business & its
environment
Analyze its past
performance



Decide on actions
(What to do now)
Implement
strategies (How
will you do it)
Evaluate the farm
plan (Is it working)
Identify the Farm’s Business
Goals: SMART
- Specific (in what it is),
- Measurable (it can be
measured and proven),
- Attainable (realistic),
- Rewarding (it moves the
operation along its
expected path, and
- Timely (there is a time
limit to reach the goal).
Chapter 2 : Create the
Farm’s Resource Inventory






Human & Personnel
Soils, topography,
water, annual rainfall,
land, buildings,
fences, farm map
Equipment
Animals & Wildlife
Crops
Financial Resources
Chapter 3: SWOT Analysis




Internal Strengths of
the operation
Internal Weaknesses
of the operation
Opportunities - the
External business
environment
External Threats to
the operation
Chapter 4: Farm Business
Transactions





Transactions are
exchanges of
resources
Cash or Non-cash
Inflows into the
operation or Outflows
from the operation
For the Farm business
or Personal
Lead into Income
Statement & Balance
Sheet analysis
Chapter 4: Cash Transaction
Logs for Farm Activities:



Profit Centers: Where direct costs and
returns are recorded by enterprise for
products sold in the production year, i.e.,
cow enterprise-sell weaned calves; fresh
market sweet corn enterprise
Support Centers: Where cost are
compiled to be allocated back to the
enterprises, i.e., tractor fuel, finance
charges, labor, rent
Cost Centers: Where the product is not
sold in the production year, i.e., cow
enterprise-sell stocker calves
Chapter 5: Information
from the Transaction Logs
are used for financial
analysis:
Income Statements
 Balance Sheets
 Cash Flow Statements
 Financial Ratio analysis
 To determine the farm’s financial
position

Budgets from Transaction
Logs show full cost
accounting





Income potential
for the commodity
Its Variable costs
Its Fixed Costs
Its Expected Net
Income
Its contribution to
the farm
Chapter 11: Evaluating
Market Alternatives








Farmers’ Markets
Roadside Stands
Cooperatives
Retail Markets
Brokers
Livestock Auctions
Retained ownership
Video/Tele-auctions