SESSION 10: COMPONENTS OF A FARM

BUSINESS PLAN, PART 2: FINANCIAL

PLAN (PROFITABILITY AND CASH FLOW
& AVAILABILITY) AND RISKS & RISK
MANAGEMENT

Objectives
By the end of this session, the participants shall have prepared the individual farm business plan
highlighting;

1. Profitability;

2. Cash flow and availability; and

3. Risk Management.
FINANCIAL PLAN

• A financial plan is a document containing a person's current

money situation and long-term monetary goals, as well as
strategies to achieve those goals.
 PROFIT

• Profit is the amount remaining when costs are deducted from income.
 TOTAL EXPECTED INCOME

MARKET TOTAL VALUE (₱)

PRODUCT QUANTITY PRICE/ UNIT
EXAMPLE

ITEM/PRODUCT QUANTITY UNIT PRICE TOTAL VALUE

Corn 1600kg ₱23.00 ₱36,800.00

 
Total income ₱36,800.00
 TOTAL EXPECTED VARIABLE COSTS

Resource/Input Quantity Needed Cost/Unit Total Cost (₱)

 EXAMPLE

ITEM QUANTITY UNIT COST (₱) AMOUNT (₱)

Seed 50kg 50 2500

Fertilizer 1 bag 700 700
Fertilizer – 2 1 bag 3500 3500
Irrigation charges 10 hours 400 4000
Labor charges 8 hours 400 3200
Harvesting 8 hours 250 2000
  Total variable costs 15900
Enterprise profit 20900

Expected enterprise profit = Total expected income – Total expected variable cost
CASH FLOW
It provides information about the cash inflow and cash outflow of an entity during a period of time.

Cash inflow –
Cash outflow -
 RISK IN FARMING
Risk refers to things that could happen that can harm the farm business. Farmers need to anticipate
these risks ahead of time, and be prepared with mitigation strategies.