A Guide to Make Crop Farming Business Plan

crop farming business plan 2021

What is crop farming?

Crop farming is the growing or cultivation of crops for human or animal consumption or commercial reasons. Crop farming is a science and art – skills can be acquired informally, for instance, from parents, relatives, etc, or formally through agricultural training seminars, workshops, or dedicated agricultural training institutions. Also Starting a Business need dedication, hard work, and consistency.

The types of crops that can be grown depending on environmental factors or conditions, market needs, and preferences. Crops are climate-specific. Thus, people generally grow crops that do well in their particular area of residence and for which there is market demand.

Some crop farming statistics

Crop production according to major food categories

According to the Food and Agriculture Organisation (FAO), the production of primary crops grew by about 50% between 2000 and 2018. This increase is due to:

  • Increased use of fertilizers, pesticides, and irrigation
  • The increased area under cultivation
  • Better farming practices
  • Planting of better yielding crop varieties

By 2020, the 4 main groups of crops produced were cereals, (24%), sugar crops (24%), vegetables (12%), and oil crops (11%). See the chart below.

Global Crop Production

Crop production by types of crops grown

FAO statistics show that 4 types of crops account for half of all global production. These are sugar cane (22%), maize (12%), rice (8%), and wheat (8%). See chart below.

crops grown in 2020

Crop Farming and Uses of Crops

Crop farming for human and livestock consumption

Food crops. These are grown for human consumption and include vegetables, fruits, cereals, grains, etc. As discussed, maize, rice, and wheat account for the highest crop types grown globally.

Feed crops. These are produced to feed animals. Forages, such as nappier grass, are cultivated, cut, and fed to dairy animals – these are known as green chops. Other types, known as hay crops, are cut, dried, and stored. With the increased demand for meat, the farming of feed crops has risen sharply. FAO indicates that 33% of all arable land globally is used to produce feed crops.

Crop farming for industrial consumption

Fiber crops. A good example is a cotton, which is the most common type of fiber crop used in textile manufacturing. Other textile crops include flax, bamboo, and hemp (used to make paper, rope, and textiles). The hevea tree, predominantly found in South America, produces latex which is harvested and processed to manufacture rubber, which has many industrial applications.

Oil crops. Biofuels are obtained by processing various types of crops.  Biofuel is in great demand due to the rising cost of petroleum and concerns over global warming. For example, bioethanol is made from sugar and starch crops and can be used to drive vehicle engines. Biodiesel is prepared from a mixture of alcohol with vegetable oils – these are oils derived from crops such as macadamias, coconuts, and pecans. 

Crop Farming Processes

  1. Crop selection

Deciding the type of crop to cultivate is very important. Here, factors to consider include:

  • Market timing – assessing whether there will be a ready market for the crop when it matures.
  • Climate and soil suitability – the prevailing climate needs to favorable to a given crop. Crops are also specific to soil characteristics e.g. acidity/alkalinity, soil moisture content, etc.
  • Farmer support systems and materials – for example, are there people who can offer advice on farming? Are our high-quality seeds available at reasonable prices?
  • Land capacity – there must be enough land to grow the crop in appreciable volume. For example, wheat farming needs expansive land.
  • Infrastructure – this touches on the availability of storage facilities, road networks to transport produce, among other factors.
  1. Land preparation

This phase involves the breaking up of the soil to facilitate seed growth. This process helps to break up big soil lumps and aerates the soil so that plant roots can breathe. It also serves to mix minerals and nutrients properly, thereby enhancing the fertility of the soil.

  1. Sowing

This is the placement of crop seeds into the ground. Seeds must be of good quality and free from infection. Seeds must be sown at proper distances and depths depending on the crop being grown.

  1. Addition of fertilizers/manure and irrigation

Fertilizers and manure. Soil may not have adequate amounts of nutrients to sustain plant growth. These nutrients need to be supplemented by fertilizers and/or manure. Manures are usually prepared from a mixture of animal matter/waste and decomposing plant material in compost pits. Fertilizers are bought ready to be added directly.

Irrigation. Where rainfall is inadequate, irrigation is required. Irrigation water can come from rivers, lakes, wells, or boreholes. In rural areas, irrigation systems may be a manual process but in larger farms machinery such as pumps may be needed to draw water from the source to the farm. Water can be distributed through sprinkler systems, water canals, or drip irrigation systems.

  1. Crop maintenance

This ensures sustained plant growth. An example is weeding. Weeding is done manually for small farms but for large farms, this may be impractical. Here, herbicides are used to destroy weeds. Other crops may require periodic pruning to maintain high yields. The process of crop maintenance depends on the type of crop cultivated.

  1. Harvesting

Harvesting is the process of cutting mature crops in preparation for storage. This depends on the crop type. For instance, grain crops require threshing, which is the separation of grains from harvested crops. Harvesting activities are usually manual for small-scale crop farming but large-scale farms require mechanized harvesting processes.

Some crops need to be stored before delivering to markets. Improper storage can lead to huge losses. According to FAO, about one-third of all food produced (representing about 1.3 billion tonnes) is lost due to improper storage.

Planning for Crop Farming

Successful crop farming requires careful planning.  There are 4 main reasons to do planning:

Determination of feasibility. This helps determine if the given crop can be planted successfully under prevailing physical conditions (climate, soil, etc) and if there is a market for the produce. Availability of the market depends on aspects such as prevailing demand, competition, and farming costs.

Planning of tasks. With the many activities that need to be done in crop farming, proper planning identifies which activities need to be done and at what time. Such planning increases efficiency and output.

Time management. Time management ensures that time is utilized efficiently and effectively, which keeps the farmer in line with crop production. For example, a farming plan helps the farmer to know when to buy farm inputs e.g. fertilizers, seeds, etc in time for use.

Financial planning. A crop farming plan enables one to determine the amount of money required to perform various tasks. For instance, the farmer can determine beforehand, how much money is required for farm inputs, labor, etc. Lack of proper planning financial planning leads to misuse of funds and thereby losses.

Elements of a Crop Farming Business Plan

The following lists some of the key aspects that are addressed by a crop farming business plan.

Planning for Crop Farming

  1. Identification of goals and objectives

This answers the question ‘what do you want to achieve with crop farming?’. Goals and objectives can include financial goals, metrics such as harvesting volumes desired, etc.

It is important to note that goals and objectives should be ‘SMART’. According to the SMART acronym, goals/objectives need to be:

  • Specific – each goal should be targeted towards one clear objective
  • Measurable – goals should be time-bound, for example, a goal stated as ‘I want to earn $10,000 in revenue in 12 months is a measurable goal.
  • Attainable – goals should be easily attainable or feasible within the given time frame.
  • Realistic – For instance, it is not feasible to expect $10,000 from one acre of tomatoes in one harvest due to the limitation of the planted area.
  • Time-bound – each goal should be placed within a definite time scale
  1. Assessment of the market environment

This is an important aspect of a crop farming business plan. It is important to study the environment to assess if there is a real need for the farming process. There are two types of assessments:

Internal environment or focus.  SWOT analysis is used to identify the internal environment of the farming business or project. SWOT identifies the strengths of the business, its weaknesses, opportunities at hand, and threats. When these are identified, it is possible to deal with each factor effectively and especially for weaknesses and threats.

External environment.  This can be done using a PESTEL analysis. This leads to questions that will help in planning. PESTEL is an acronym for:

  • Political – are there any political factors that may impact the farming process?
  • Economic – how will prevail economic factors suitable for the project? For example, high fuel prices usually affect costs transportation which in turn affects the costs of farm inputs, labor, etc.
  • Social issues – how will cultural trends, demographic changes, changes in lifestyle, and other social changes impact market demand? For example, there is an increase by people for organic foods over food grown with chemical fertilizers.
  • Technological – how will technology affect your market? For example, the rise of e-commerce has changed the nature of supply chains and created new markets and opportunities. Issues of technology cannot be ignored.
  • Environmental – how will issues such as waste management, carbon footprint, recycling, waste disposal, etc affect crop farming? Small scale farms may not really be concerned but consumers are increasingly concerned about environmental issues. For those seeking export markets, environmental factors cannot be avoided.
  • Legal factors – how will legal factors affect crop farming? Legal factors include consumer law, employment legislation, health, and safety, etc. For example, health and safety is an increasing concern; safety concerns have led to more stringent food safety requirements that must be met before sale to the public.
  1. Identification of resources required

Any crop farming process requires resources. Resources can be grouped into:

  • Financial resources – how much money is needed from planting up to harvesting? Where is this money going to come from? If the money comes from a loan, then a farming business plan should specify how the loan will be repaid
  • Human resources – this includes labor required in the farming process and how much money needs to be set apart for this.

Physical assets/equipment – addresses the question of what equipment is required to farm, for example, plowing equipment such as tractors, harvesting equipment, storage facilities, etc. Another factor to consider is whether the equipment will be bought or hired.

If you’re writing a crop business plan may be a big venture. Don’t let that put you off. Your plans are often as simple because they must be for immediately. Begin together with your mission statement and goals. Do your homework by analyzing markets and researching competitors and trends. Celebrate brainstorming alternative strategies and allow them to infuse a short time. Take it one step and this is the right time to start crop farming today.