Finances & Recordkeeping
Finances
Remember, a sustainable farm business is also a profitable farm business. It's critical that farm and food business owners have a well-developed business plan that will guide their financial decisions, but that they also keep excellent records of all activities and finances associated with the business. Paying attention to your finances and records will indicate whether you are making a profit or losing money on any of your business decisions. Everyone’s monetary needs will be different, as some people are farming part-time and have other means of income, while others are farming full-time and relying solely on their farm business for income. A good place to start with understanding your financial needs is to assemble your finances into some key documents:
- A balance sheet is a helpful way to see the big picture of the farm’s financial situation; it shows the farms assets, liabilities, equity, and net worth.
- An income statement includes the gross and net profits of the farm by helping you track your different sources of farm income and expenses.
- A cash flow statement helps you track inflow and outflow of cash for your farm. This can help you realize when cash flow may be low and how to plan for those times.
To learn more about these financial documents, see the Basic Accounting: Guidance for Beginning Farmers handout. You may also want to build a relationship with an accountant, CPA, or other business professional as your business grows.
Financial Assistance
If you are looking for assistance getting started, a great place to look for financial support is with the Farm Service Agency (FSA). The FSA offers certain loans, programs and services to help farmers start and maintain their farm business. Other financial resources offered through the FSA are:
Guide for applying for an Farm Service Agency (FSA) Loan
Recordkeeping
It is imperative to keep detailed records while farming to help understand your finances. Good recordkeeping can help you learn where profits or losses are occurring from different crops and/or animals. For any type of farm, keeping good records of farm labor for everyone involved in your farm operation is imperative. The University of Georgia has a great Farm Record Book that you can print and keep on hand, as well as an Excel spreadsheet that will help you track your finances.
The Southern Sustainable Agriculture Working Group (Southern SAWG) recognizes there is no "one size fits all" when it comes to keeping records. You can find blank templates for various aspects of any farming enterprise from their website.
Setting and Tracking Your Budget
For fruit and vegetable growers, you should record items such as varieties, yields, inputs, seed costs, and planting dates. Veggie Compass is an online farm management tool for diversified fresh market vegetable growers. Producers will enter data into a spreadsheet regarding their expenses, sales, and production labor hours. The spreadsheet uses the data from the input pages to calculate each crop’s cost per pound ($/lb), breakeven price, and gross margin by market channel. Farmers can then adjust which crops to grow, how much to grow, and pricing to increase profits as well as make more informed farm management decisions. Having good records from year to year helps you learn from previous mistakes or repeat successful cropping strategies. These records can also help you dictate your planting schedules into the future. For animal production, you should record items such as herd size, number of animals sold, feed costs, veterinarian costs, and seed costs.
The University of Georgia provides Enterprise Budgets, which represent average costs and returns for specific crops and agricultural products. Extension Agents, growers and the general public can customize these budgets to fit their specific needs simply by inputting their own data to get their net and/or expected returns on their investment (ROI). These budgets are only general guidelines, and each farm business should develop their budgets based on their specific situation.
If you are looking for additional information on finances and recordkeeping, please see our Resources page to find other publications and useful tools.