Capital Sales and Purchases. Cash flow Income Statement Financing. Assets. Costs. Liabilities Schedule F 1

Capital Sales and Purchases Costs Assets ROI Revenues Cash flow Income Statement Financing Liabilities Schedule F 1

Financial data collection Financial analyses F 2

Finances : Forecasting costs Penelope Tunnell 1. Introduction 2. Simple view of finances 3. FarmOrganizer methodology to determine costs 4. Questions F 3

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1-1 Planning Include planning required to become certified in farm planning 1-2 Constraints Include costs for certification when completing taxes. Check if any insurance is required. 1-3 Finances Costs for certification. Find out if any financial assistance for certification costs. 1-4 Performance evaluation What standards should be met? What monitoring and data recording is required? 2 Production Production methods required for organic certification 3-1 Intelligence Find out about the organic certification body and organic certification companies. Join COG 3-2 Selling Promotional material to include organically certified Pricing should reflect that products are organically certified. Delivery vehicles 3-3 Customers Inform customers, e.g. restaurants so that they can benefit too. 3-4 Contacts Record contact information for certification bodies 4-1 Resources-Human Get training on organic certification 4-2 Resources-Animal What are the practices should be followed for raising animals? 4-3 Resources-Land What land maintenance practices should be followed? 4-4 Resources-Building Must comply with standards for organic certification 4-5 Resources-Equipment Must keep equipment cleaned. 4-6 Resources-Supplies Ensure water sources comply. Seeds, feed etc. 4-7 Productivity What would be the most efficient way to record data required for organic certification 4-8 Knowledge base Easy retrieval of documentation that will be required by inspector F 5

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Harris Ivens F 11

1. Financial data REVENUES the money you earn $$$ ($$$) EXPENSES the money you spend Calculate balance Revenues > Expenses = PROFIT Expenses > Revenues = LOSS ASSETS the money you have LIABILITIES the money you owe F 12

2. Financial analyses $$$ Revenues Assets Reporting and analyses $$$ Expenses Liabilities Financial data For example Taxes Funding Planning & Performance F 13

Determining costs Objectives Activities Human resources (Skills & time) Other resources $$$ COSTS F 14

Planning [A] Explore options [B] Plan for selected options 1 Determine current position 2 Have a vision 5 With farm advisor select most feasible options May 2012 = -$10,000? $$$ ($$$) 9 Identify shortfalls & how to address them 8 Complete budget, cash flow & schedules 3 Investigate CURRENT RESOURCES & $$$ CONSTRAINTS MARKETS 4 $$$$$? 7 Identify activities requirements & costs to achieve objectives PRODUCTS & SERVICES Evaluate selected options Farm proposal 6 Define objectives F 15

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ACTIVITY 2013 2014 2015 2010 Finances Production Markets Resources Total gross revenue Farm Hops : $6,000 Horse boarding $8,000 TOTAL farm: $14,000 Off farm work $120,000 Hops 700 bines Horse boarding 3 horses Hops Microbreweries Horse boarding Local Farm partners Family/friends to pick hops Broad objectives Total gross revenue Farm Hops : $10,000 Horse boarding: $8,000 TOTAL farm: $18,000 Off farm work $80,000 Hops 800 bines Horse boarding 3 horses Hops Microbreweries Horse boarding Local Farm partners Family/friends to pick hops Total gross revenue Farm Hops : $12,000 Horse boarding: $8,000 Fruit: $4,000 TOTAL farm: $24,000 Off farm work $60,000 Hops 900 bines Horse boarding 3 horses Fruits 50 table grape Hops Microbreweries Horse boarding Local Fruit Farmers markets Farm partners Family/friends with some paid labour to pick hops Total gross revenue Farm Hops : $16,000 Horse boarding: $10,000 Fruits: $60,000 TOTAL farm: $86,000 Off farm work $5,000 Hops 1000 bines Horse boarding 4 horses Fruits 100 table grape 100 Asian pear Hops Microbreweries Horse boarding Local Fruit Organic certified fruit wholesalers Become incubator for new farmers use of land & equipment in return for labour F 17

Production objectives 2013 Gross total revenue: $14,000 Products/Services Volume Estimated gross revenue Hops 700 bines 6,000 Horse boarding Increase from 2 to 3 boarders 8,000 TOTAL 14,000 F 18

Non-Production objectives 2013 Activity category General Hops Boarding 1.1 Planning Complete farm plan for the year Start succession planning Include new boarder in feed schedule 1.2 Constraints Complete taxes Start organic certification process 1.3 Finances Book keeping done Tax installments paid Separate accounting 3.2 Selling Review pricing strategy Find another boarder 4.1 Resources: Human More labour hired for picking hops Have accountant who is specializes in farm finances & taxes 4.2 Resources: Animal Look after farm animals 4.3 Resources: Land Repair road Maintain hop yard Reseed aisles with clover F 19

7 Identify activities, requirements & costs to achieve objectives $$$ ACTIVITY WHEN HOW WHO RESOURCES COSTS LONG F 20

WHATs and HOWs: EXAMPLE REQUIREMENTS What How Skills Time required Animals Equipment Supplies With a horse Ploughing with a horse 1 person 6 hours Horse Horse drawn plough None Plough a 6acre field With a tractor Using a tractor Ploughing 1 person 3 hours Tractor Plough for tractor Diesel F 21

WHATs and HOWs: Production What How Production objective: 700 bines Tighten cable wires Put twine up for all plants Wind bines around twine Keep aisles cut Keep hop rows weeded Keep hops watered Pick hops Check picked hops for wastage Package hops Store hops Tractor and staircase and necessary tools 2 twines per plant By hand, 2-3 bines per twine Small tractor with mower Use weed wacker need a second weed-wacker Irrigation system Use bags that can be put carried on shoulders Use ladder and staircase Use large table with a sieve as a base Vacuum pack with nitrogen Use light resistant bags Use refrigerator need a larger refrigerator F 22

Production requirements Objective: 700 hop bines Begin: Mar 15 2013 End: Oct 30 2013 What When Duration Tighten cable wires Put twine up for all plants Wind bines around twine Keep aisles cut Keep hop rows weeded Keep hops watered Pick hops Check picked hops for wastage Package hops Mar 15 1 day Mar 20-30 5 days Apr 15 May 5 Apr 1 Aug 31 Apr 1 Aug 31 Apr 1 Aug 31 10 days 2 hrs/mth 5 months 15hrs 2 times 10 min/week 18 weeks Aug 1-31 20 days Human resources Skills Working with cables Tying knots Hop knowledge Driving tractor Using a weed wacker Irrigation system Hop knowledge Time HR Costs $10/hr Physical Resources Land Animals Buildings Equipment 3 hrs 30 Tractor, staircase 2 times 10 hrs 200 Tractor, staircase Costs 15 hrs 150 Trimmers N/A 10 hrs 100 Mower N/A 30 hrs 300 2 weedwackers 3 hrs 30 Irrigation system 100 hrs 1000 Ladders Bags Supplies Cost s 0 N/A 0 Twine 100 N/A N/A N/A Aug 1-31 20 days Patience 10 hrs 100 Sorting table N/A Aug 1-31 20 days Vacuum packing m/c 10 hrs 100 Vacuum packing m/c Bags 50 TOTALS $2,010 150 Comments Have equipment & tools Cost of diesel treated as overhard Hops are hardy and weeds do not bother them F 23

WHATs and HOWs: Non-Production Activity category What How 1.2 Constraints Complete taxes 1. Ensure financial records up-to-date 2. Use tax specialist to complete 4.5 Resources: Equipment Obtain tractor 1. Do cost/benefit analysis hire, borrow, lease, buy 2. Hire, borrow, lease or buy F 24

Non- Production requirements What Start Finish Other costs Human resources Physical Resources Skills Time HR Costs Equipment Costs Supplies Costs Comments 1.1 Planning Complete farm plan Nov1 Dec 31 Planning 30hours 300 Computer none none Done by partners 1.2 Constraints Complete taxes Mar 1 Mar 31 Accountant 5 hours 1,000 Computer none none Partners working with accountant 1.3 Finances Pay taxes in 2 instalments May 31 Nov 31 4,000 2,000 each instalment 3.1 Intelligence Attend Guelph conference 3.2 Selling Jan 30 85.00 none Use car none Gas included in overhead Set up website Jan 1 Jan 30 Website design 30 hours 2,000 Computer none Internet provider 30/mth Use professional website designer 4.3 Resources: land Repair road May Working with none Tractor & front end loader none Gravel 200 Gas included in overhead 4.5 Resources: equipment Tractor services Feb 200 Includes oil etc. F 25

8 Complete budget, cash flow & schedules $$$ ($$$) F 26

Cashflow example Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Verify budget REVENUES Hops 4,000 2,000 6,000 Horses 750 750 750 750 750 750 750 750 750 750 750 750 9,000 TOTAL REVENUES 750 750 750 750 750 750 750 4,750 2,750 750 750 750 15,000 EXPENSES Labour: Hops Production 230 230 86 86 86 1,286 2,004 Labour: Horseboarding 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Labour non-production 300 100 1,000 100 100 100 100 100 100 100 100 200 2,400 Barn electricty 80 80 80 80 80 80 80 80 80 80 80 80 960 Tax instalments 2,000 2,000 4,000 TOTAL EXPENSES 580 380 1,510 610 2,466 466 466 1,666 380 380 2,380 480 11,764 Bank start balance 100 270 640-120 20-1,696-1,412-1,128 1,956 4,326 4,696 3,066 Bank end balance 270 640-120 20-1,696-1,412-1,128 1,956 4,326 4,696 3,066 3,336 F 27

Schedule example 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec PLANNING, MONITORING, CONTROL Planning Complete taxes Start organic certification Book keeping LINKING Guelph conference Promote hops Take orders Deliver hops Learn about permaculture SUPPORTING Order rhizomes Buy hop yard supplies Rent equipment for hop yard set up Improve West pasture Compost hay fields Fix spreader Service tractors F 28

9 Identify shortfalls & how to address them Shortfall May 2012 = -$10,000 Shortfall August 2012 = 100 hours labour for picking hops F 29

Example 1.1. Planning:.9. Shortfalls Addressing shortfalls Shortfall How shortfall to be addressed Done 1.3 Finances May: $10,000 Oct: $3,000 4.1 RESOURCES: Human Aug/Sep: 50 hours extra labour for harvesting 4.2 RESOURCES: Animal Increase Line of Credit pay back when get hop sale revenues in August Use Line of Credit reduce with horse boarding fees Pay casual labour $12/hr 4.3 RESOURCES: Land 2 acres for Asian pears Clear 2 acres in overgrown field by stream 4.4 RESOURCES: Building Out building for equipment Look for used one F 30

1. Financial data REVENUES the money you earn $$$ ($$$) EXPENSES the money you spend Calculate balance Revenues > Expenses = PROFIT Expenses > Revenues = LOSS ASSETS the money you have LIABILITIES the money you owe F 31

2. Financial analyses $$$ Revenues Assets Reporting and analyses $$$ Expenses Liabilities Financial data For example Taxes Funding Planning & Performance F 32

Planning [A] Explore options [B] Plan for selected options 1 Determine current position 2 Have a vision 5 With farm advisor select most feasible options May 2012 = -$10,000? $$$ ($$$) 9 Identify shortfalls & how to address them 8 Complete budget, cash flow & schedules 3 Investigate CURRENT RESOURCES & $$$ CONSTRAINTS MARKETS 4 $$$$$? 7 Identify activities requirements & costs to achieve objectives PRODUCTS & SERVICES Evaluate selected options Farm proposal 6 Define objectives F 33

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