A business plan is a roadmap that defines the development path of an enterprise. In agriculture, its creation has certain specifics due to industry characteristics: higher risks, more complex forecasting, etc. This document is necessary both for agribusiness owners to see the complete picture and company prospects, and for investors aiming to evaluate investment potential.
What is a Business Plan
A business plan is a document that details the commercial project of an agricultural enterprise. It answers the key question: is it worth starting the activity and investing money in it?
The main objectives of a business program in agriculture:
- justify the economic feasibility of creating and developing an agricultural enterprise;
- identify the project’s strengths and weaknesses;
- forecast agribusiness development;
- reduce business risks in agriculture;
- identify promising markets for agricultural products;
- attract investor support.
A business plan is a tool for successful launch and development of an agricultural enterprise that helps evaluate prospects, minimize risks, and obtain necessary resources.
Purpose of a Business Plan
A business plan is created when you need to:
- create a step-by-step roadmap of actions and budgets for each stage;
- understand the market, target audience, niche, and project prospects;
- calculate initial capital and further investments.
Another purpose of a business plan is to prove to investors the effectiveness of investments and the project’s importance for the economy or community.
The online service WEAGRO helps agricultural entrepreneurs buy goods/services in installments, and suppliers sell through the online service. This can become an additional argument for attracting investments and partners.
Types of Business Plans
In agriculture, the main types of business plans are:
- startup – launching a new agribusiness;
- development – expansion, modernization, change of strategy of an existing enterprise;
- internal – roadmap developed by owners and company management;
- investment – for attracting funds, credits, grants.
Each of these types has its specifics and target audience. But they all aim to achieve specific financial goals in agriculture, so the principle of how to create a business plan is the same for all of them.
Read also: Farm Enterprise: What It Is, Types, How to Name and Register
How to Create a Business Plan
The process of developing an agricultural business plan consists of the following steps:
- Description of agribusiness concept – idea, goals, mission, competitive advantages.
- Agricultural market analysis – size, trends, competition, target audience.
- Marketing strategy – positioning, pricing, agricultural product promotion channels.
- Production model – technologies, equipment, capacities, resources, logistics.
- Organizational model – enterprise structure, personnel, implementation stages.
- Financial planning – costs, profits, payback, break-even point.
- Risk analysis – potential threats, measures to minimize them.
Before writing a business plan, it’s important to gather all necessary information: research the agricultural market, competitors, evaluate your own resources and assets, think through the financial model. The finished document should be structured, clear, and convincing.
Business Plan Creation Order
The main stages of creating an agricultural business plan:
- Defining agribusiness goals and objectives.
- Researching agricultural market and competitors.
- Developing marketing strategy.
- Planning agricultural production.
- Creating organizational model.
- Financial forecasting.
- Evaluating risks and ways to minimize them.
Careful execution of each stage in creating a business plan ensures the development of a comprehensive and effective roadmap that becomes a reliable foundation for successful agricultural enterprise development.
Business Plan Structure
A typical business plan structure for agriculture includes the following sections:
- Business plan executive summary – a brief overview of key project aspects: business idea essence, competitive advantages, required investments, expected financial results. Written last, although it goes at the beginning of the document.
- Company description – information about the enterprise, its mission, goals, founders and team, organizational structure, location, etc.
- Product description – characteristics of agricultural products or services, their advantages and benefits for consumers, production technology, packaging features, storage, transportation.
- Market analysis – research of agricultural market, its size, dynamics, segments, competitive environment, entry barriers, distribution channels, target audience, etc.
- Marketing plan – strategy for market promotion of agricultural products, pricing, sales forecasts, advertising budget.
- Production plan – description of capacities, technology, equipment, raw materials, personnel, suppliers, product cost calculation.
- Organizational model – information about founders, management, enterprise personnel, project implementation schedule.
- Financial plan – forecast of income and expenses, cash flow, break-even point, calculation of efficiency indicators, business payback.
- Risk assessment – analysis of potential threats to agribusiness and ways to eliminate or minimize them.
Business plan sections can be supplemented with appendices: calculations, graphs, schemes, illustrations, etc.
Read also: Factoring and factoring operations: what it is and how it works in Ukraine
Business Plan Formatting
The writing of an agricultural project business plan has certain requirements:
- title page with project name, company and manager data, creation date;
- clear document structure with sections and subsections;
- competent, concise presentation style;
- visibility – use of tables, diagrams, graphs for better information perception;
- volume – 30-50 pages.
A professionally composed and formatted business concept increases the agricultural project’s chances for success and attracting financing.
Business Plan: Example
Let’s look in detail at how to create a business plan for “GreenHarvest” farm, which plans to grow grain and oilseed crops in the Kyiv region.
Executive Summary
“GreenHarvest” farm aims to create a profitable enterprise growing wheat, barley, and sunflower on 500 hectares in the Kyiv region. Key competitive advantages will be the use of modern agricultural technologies, highly qualified personnel, and established product distribution channels.
To launch the project, it’s necessary to attract 10 million UAH in investments, which will be directed towards purchasing equipment, working capital, and forming a reserve fund. The payback period is expected to be 3 years, with profitability reaching 35%.
The founders of “GreenHarvest” farm are experienced agronomists I.I. Ivanenko and P.P. Petrenko, who have over 10 years of industry experience. The project team also includes a chief engineer, accountant, agronomist, and 10 permanent workers.
Company Description
“GreenHarvest” farm will be established in 2025 as a private enterprise specializing in crop production. The farm’s land bank will comprise 500 hectares, of which 300 hectares will be allocated for wheat, 100 hectares for barley, and 100 hectares for sunflower.
To ensure the production process, it’s planned to purchase 2 tractors, 1 combine harvester, 1 truck. Equipment maintenance will be carried out in-house in a specially equipped workshop.
The enterprise will be managed directly by founders I.I. Ivanenko and P.P. Petrenko. The team leader will be the chief agronomist, who will be responsible for production processes and product quality control. Under the chief agronomist’s supervision will be two more agronomists responsible for specific work areas – plant protection, fertilizers, etc.
Administrative personnel will include an accountant and secretary who will ensure documentation management and financial accounting. For field work, it’s planned to hire 10 permanent workers and engage seasonal workers during sowing and harvesting periods.
“GreenHarvest” farm will be located in Velyka Dymerka village, Brovary district, Kyiv region. There, it’s planned to rent office space and build a covered grain storage facility with a capacity of 1,000 tons. For workers, facilities will be equipped with showers and changing rooms.
Market Analysis
The grain and oilseed market in Ukraine and worldwide is one of the most promising and dynamic. According to the State Statistics Service, in 2022 the gross grain harvest was 67 million tons, which is 5.7% more than the previous year. Meanwhile, grain exports from Ukraine reached a record 57 million tons.
The main buyers of “GreenHarvest” farm products will be large agricultural holdings, processing enterprises, and traders. Among potential clients are companies like “Kernel”, “Nibulon”, “Cargill”, “Bunge”, etc. These enterprises purchase grain for further processing or export.
The main competitors of “GreenHarvest” farm in the region are farms “Kolos”, “Nyva”, and “Lan”, which have larger land areas and work experience. However, by offering higher product quality and more flexible cooperation terms, “GreenHarvest” will be able to successfully compete with them.
Among the main risks for “GreenHarvest” farm are weather conditions, fluctuations in grain and fertilizer prices, and changes in state industry regulation. To minimize these risks, it’s planned to implement modern agricultural monitoring systems, diversify crops, and form financial reserves.
Production Plan
“GreenHarvest” farm will use intensive technology for growing grain and oilseed crops, which involves using high-quality seeds, a balanced fertilization system, integrated plant protection, and precision farming.
For wheat sowing, domestic selection varieties “Podolyanka”, “Bohdana”, “Favorytka” will be used, which are characterized by high yield and disease resistance. The seeding rate will be 4.5-5.0 million seeds per 1 ha. The fertilization system will include nitrogen, phosphorus, potassium fertilizers and microelements according to crop needs.
For barley, varieties “Komandor”, “Vsesvit”, “Svyatohor” will be used with a seeding rate of 3.5-4.0 million/ha. The crop care technology will be similar to wheat.
For sunflower, hybrids from companies “Syngenta”, “Limagrain”, “Pioneer” will be sown with a plant density of 50-60 thousand/ha. The protection system will include herbicides, fungicides, and insecticides for weed, disease, and pest control.
Overall, the planned yield will be 60 c/ha for wheat, 50 c/ha for barley, and 30 c/ha for sunflower. The gross grain harvest is projected at 18,000 tons of wheat, 5,000 tons of barley, and 3,000 tons of sunflower. Production cost will be about 7 UAH/kg, of which 50% will be material costs (seeds, fertilizers, fuel).
For grain storage, a dedicated warehouse with a capacity of 1,000 tons will be built, equipped with a modern ventilation and humidity control system. The remaining harvest will be sold immediately after harvesting through long-term contracts with buyers.
Financial Plan
To implement the “GreenHarvest” farm business plan, it’s necessary to attract 10 million UAH in investments. Of these, 7 million UAH will be directed towards purchasing agricultural machinery: 2 tractors (2.5 million UAH), 1 combine harvester (3.5 million UAH), 1 truck (1 million UAH). Another 2 million UAH will constitute working capital for purchasing seeds, fertilizers, plant protection products, fuel. 1 million UAH will be reserved for unforeseen expenses.
Funding sources will include founders’ own funds of 4 million UAH, and a bank loan of 6 million UAH for 5 years at 18% annual interest. Repayment is planned to be made from the enterprise’s net profit.
In the first year of operation, “GreenHarvest” farm plans to receive 18 million UAH in revenue from crop sales. Total expenses will amount to 15.3 million UAH, of which 8.1 million UAH are material costs, 4.2 million UAH – labor costs with charges, 1.8 million UAH – equipment depreciation, 1.2 million UAH – other expenses. The financial result before tax will be 2.7 million UAH, net profit – 1.5 million UAH.
In the second year of operation, revenue will increase to 20 million UAH due to increased yield and cost optimization. Production profitability will increase to 30%, and net profit will reach 3 million UAH.
In the third year, “GreenHarvest” farm plans to reach design capacity and receive 25 million UAH in revenue. Net profit will increase to 4.5 million UAH, which will allow full loan repayment and start paying dividends to founders. The overall enterprise profitability will be 35%, and the investment payback period – 3 years.
In the future, “GreenHarvest” farm plans to expand its land bank, increase crop variety, invest in building additional drying and grain processing capacities. The possibility of entering export markets and cooperating with state authorities to receive various forms of farming support is also being considered.
Business Planning Standards
To get more information on how to write agricultural project business plans, you can refer to these popular international standards:
- UNIDO (United Nations Industrial Development Organization) – the most common standard used by the UN Organization for Industrial Development. Main focus is on production and marketing plans.
- EBRD (European Bank for Reconstruction and Development) – standard applied to projects seeking EBRD financing. Focus on the financial part of the roadmap.
- KPMG (KPMG International Cooperative) – standard developed by the international consulting company. Emphasizes internal processes and enterprise management.
The choice of standard depends on the business plan objectives and requirements of investors or creditors.
Common Mistakes in Business Plan Creation
When creating a business plan, avoid these mistakes:
- superficial analysis of agricultural market or competitors;
- unclear positioning, lack of unique selling proposition;
- unfounded assumptions about product demand and prices;
- lack of reserves and safety margin for force majeure;
- underestimation of costs or production expenses;
- unrealistic project payback periods;
- ignoring risks characteristic to agriculture – weather, price, etc.;
- spelling, stylistic errors in text, untidy formatting.
To avoid miscalculations during business plan writing, it’s worth involving qualified specialists – marketers, financiers, lawyers, industry experts – in roadmap development.
Conclusions
A business plan is an important tool for successful launch and development of agribusiness. It helps evaluate the viability and prospects of an agricultural project, attract investors, partners, and minimize risks. A well-prepared business concept increases an agricultural entrepreneur’s chances for success in a highly competitive industry.
Modern online services like WEAGRO simplify agribusiness management by providing opportunities to purchase goods and services in installments, while guaranteeing payment reliability. It enables more effective financial planning and enterprise cost optimization.
