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Unit 3: Managing the Farm/Ranch Business for Long-Term Success

Most experienced farmers already have many of these records. But what about a beginning farmer? A number of databases and publications can help develop pro forma financial projections that will be accepted by a commercial lender.

• USDA Economic Research Service (ERS): Commodity costs and returns

• USDA National Agriculture Statistics Service (NASS): Browse by subject or search for data specific to your state.

• USDA Agricultural Marketing Service (AMS)

In addition, there are numerous Cooperative Extension resources such as the University of Minnesota’s Center for Farm Financial Management and the UC Davis Ag and Resource Economics cost study library.

As previously noted, however, producers developing new or innovative business enterprises may have a more difficult time developing financial projections. As one direct marketer noted during a USDA-organized focus group: “Given that no business plans or profiles are available on direct marketing for lenders to know about these operations, both farm and traditional banking institutions are reluctant to make loans for direct marketing or specialty enterprises.”

The good news is that financial projections are not lenders’ only consideration when evaluating credit applications. Lenders are equally, if not more, concerned with an applicant’s management potential, past repayment history, equity status and business plan.