Farm Planning and Analysis

Introduction

The need for planning and analysis of farm enterprises to keep track of profitability and expansion of the enterprise cannot be overemphasized. For one thing, it enables the farmer and the relevant stakeholders to know the strengths and the weaknesses of the farm enterprise. For another, it provides information about the enterprise for the relevant stakeholders on the opportunities for expansion and investment.

Farm planning entails the process of allocation and organization of scare farm resources in such a way as to achieve the overall objective of a farm enterprise. It involves organization and management of scarce resources to realize the specified goals on a continuous basis. It is essentially a decision-making and choice-making process in terms of resource use and enterprise combination in the face of scarcity. Farm planning is a decision-making process to the extent that it involves the organization and management of limited resources to realize the specified goals of the farm enterprise. Farm planning is choice-making to the extent that, in the face of all possible alternatives, the farmer chooses what to produce, how to produce, when to produce and where to buy and sell all aimed at achieving the objective of a farm enterprise in the most profitable way. Farm planning involves consciously selecting the most profitable course of action from among all possible alternatives.

The objectives of a farm enterprise which farm planning aspire to achieve include economic (provision of basic human food and fiber needs), environmental, (enhancement of environmental quality and the critical resource base on which agriculture actually depends), and social (enhancement the quality of life for farmers and society in general). A farm enterprise may be pursuing one objective or a combination of objectives. Some of these farm objectives create trade-offs, where decisions to enhance one tend to detract from another. According to Janke (2000), farm planning helps integrate the objectives into a comprehensive and achievable whole, creates specific action steps and a time-line for reaching each objective, and benchmarks for monitoring when unified objective has been achieved.

Farm planning may basically be for a short or for a long term. Short term planning lasts for a relatively short period usually for a year or less. However, there may be overlaps in time horizons of both the short and the long terms. This comes about when there is a combination of both aspects of short term and long-term planning. For instance, when it is required to establish the best combination of an annual crop to grow under a permanent crop, the agronomic instructions and technology packages for annual crops are duly modified. The modifications are in line with the year-to-year changes in the development of the permanent crop.

It is needful to define such related terms as feasibility study, business plan, and farm plan and thereby bring out their differences and similarities. The differences and similarities are expected to enable the investing farmer appreciate which is applicable in what situation.

According to Women in Business (2010), feasibility studies refer to valid and verifiable information about a business structure, the products and services, the market, logistics of actually delivering the product or service, the resources needed to make the business run effectively and all relevant information about the business. The term can also be construed as a controlled process for identifying problems, opportunities, defining objectives, describing situations, defining successful outcomes, and assessing the range of costs and benefits associated with several alternatives for solving the identified problems (Thompson, 2005). A feasibility study, also called business opportunity analysis (Marzec, n,d), is an analysis of how successfully a project can be completed accounting for factors that affect the project such as economic, technological, legal, social and environmental factors (Staff, 2015). Project managers use feasibility studies to determine the potential positive and negative outcomes of a proposed project before committing resources into the project. According to Mesly (2017), the goal of feasibility study is to place emphasis on potential problems that could occur should the project be pursued and eventually determine whether the project should go ahead or else be abandoned altogether. Generally, feasibility studies precede technical development and project implementation. Feasibility studies evaluate a project’s potential for successful outcomes; therefore perceived objectivity is an essential factor in the credibility of any feasibility studies for potential investors and lending institutions.