Peach and Apricot Farm Business Plan

ExecutiveSummary
Introduction
TheWilsonFamilyPeachFarmisastartupventureforDr.JaredWilsonandhiswife,Susan.The
Wilsonswillberetiringfromtheirregularprofessionsstartinginthespringofthisyear.Thefarmis
intendedtoprovidetheWilsonswithanopportunityforpostretirementworkandincome,plusan
opportunityforbothofthemtocontinuetheirindividualresearchprogramsonagricultureand
nutrition.Approximately80acresofprimestonefruitgrowinglandistobeacquired,usingowner's
equityandafederalfarmassistanceloan.ThefarmwillbejointlyownedbyDr.andMrs.Wilsonand
willbesetupasaLimitedLiabilityCompanycharteredinGeorgia.
TheFarmanditsProducts
Thefarmhasprimefruitgrowinglandapproximately3.5northwestofGainesville,Georgia.Thisis
oneofthebestareasinthestateforgrowingpeachesandotherstonefruit.Thelandgetsplentyof
sunlight,hasexcellentdrainage,andanoptimumsoilpH.
TheWilsonFamilyPeachFarmisplanningtogrowsevenvarietiesofpeachesandnectarinesinthe
firstthreeyearsincludingtheRedhaven,Ishtara,TennNatural,Lovell,Bailey,Montclar,Starks
Redleaf,andthefamousElberta.Onceprofitabilityhasbeenestablished,thefarmwillbegintoexpand
intomorerarevarieties.
Theattractivenessofthiscropisthatfresh,highqualitypeachesandnectarinesaresweettastingand
lowincalories,withonemediumpeachfurnishingonlyabout37calories.Thesefruitareagood
sourceofVitaminCandyellowfleshedvarietiesareagoodsourceofVitaminA.
TheMarket
TheUnitedStatesprovidesaboutonefourth(25%)oftheworld'stotalsupplyoffreshpeaches.
PeachesarethethirdmostpopularfruitgrowninAmerica.Theyaccountformorethan70percentof
allstonefruitproducedintheU.S.SouthCarolinaandGeorgiafollowCalifornia's72percentshareof
peachproductionatafardistance,averagingabout6and4percentoftheU.S.totaloverthepastthree
years.LastyeartheGeorgiapeachcroptotaled115millionpoundsandbroughtin41.7million.In
additiontotheElberta,Georgianowproducesmorethan40commercialvarietiesofpeaches.Recent
eventshasshownthattheinternationalmarketforpeachesmaybeexpanding,especiallyinAsia.
WilsonFamilyPeachFarmplanstosellitscroptothreemainbuyers.Inordertokeepitsprofitmargin
high,theWilsonswillconcentrateonsellingthemajorityofitsfruittothelocalproducestandswhich
areabletochargemoreforthehigherqualityfruit.Mostoftherestofthefruitwillbesoldtolocal
fruitpackersanddistributorsthatthenresellthefruittogrocerystores.Finallyanyfruitthatdoesnot
meetthequality/maturitystandardsoftheothertwobuyerswillbesoldtocanneries.
FinancialConsiderations
Thefarmwillbefinancedwithafarmassistanceloanandasignificantamountofowner'sequity.This
willprovidesufficientcashflowforthefarmuntilitcanstartmakingrevenue.Salesareexpectedtobe
sufficienttobeprofitableinyearone,andhaveconsistentgrowththroughyearthree.

1.1Objectives
TheobjectivesoverthenextthreeyearsfortheWilsonFamilyPeachFarmare:
Achieveprofitabilityinyearone.
Expandbypurchasinganadditional50acresofadjacentlandbyyearthree.
Capitalizeonthenichemarketforhybridandspecialtystonefruits.
Increaseyieldperacretoachieveeconomiesofscale.

1.2Mission
TheMissionoftheWilsonFamilyPeachFarmistoprovidearetirementoccupationandsupplemental
incomefortheowners,JaredandSusanWilson.Inaddition,thefarmwillprovideabaseforDr.and
Mrs.Wilson'songoingresearchintheagricultureandnutritionalfields.

1.3KeystoSuccess
FarmingintheUnitedStatesisamatureindustrywithverylittlegrowthandaverycompetitive
market.ThereforetheWilsonswillfocusonthesmallnichemarketofhybridandrarepeaches,
nectarines,andotherstonefruitandalsoonqualitysoastoretainitssuppliercontractswithitschain
distributorsandlocalproducesellers.TothisendtheWilsonshaveidentifiedthefollowingkey
elementstosuccess.
Become"firsttomarket"throughuseofearlyharvestvarietiesofpeachesandnectarines.
Focusonmarketingofhybridstolocaldistributors.
Aggressivelypursuecostanalysisandreduction.
Concentrationonpostharvestcareofproducetoenhancequality.
Markettothehighendlocalproducestandsthatcandemandhigherprices.
CapitalizeonDr.JaredWilson'sclosecontactswiththeUniversityofGeorgia'sAgriculture
departmentfacultytointroducenewscientificmethodsandprocedurestogrowingstonefruit.

CompanySummary
TheWilsonFamilyPeachFarmisastartupventureforDr.JaredWilsonandhiswife,Susan.The
Wilsonswillberetiringfromtheirregularprofessionsstartinginthespringofthisyear.Thefarmis
intendedtoprovidetheWilsonswithanopportunityforpostretirementworkandincome,plusan
opportunityforbothofthemtocontinuetheirindividualresearchprogramsonagricultureand
nutrition.Approximately80acresofprimestonefruitgrowinglandistobeacquired,with60acres
beingboughtoutrightusingownersequityandafederalfarmassistanceloan.Theother20acreswill
berented.Allfarmlandwillbecentrallylocated.ThefarmwillbejointlyownedbyDr.andMrs.
WilsonandwillbesetupasaLimitedLiabilityCompanycharteredinGeorgia.

2.1StartupSummary
Farmingisacapitalintensiveindustrythatrequiressignificantinvestmentinlongtermassetssuchas
landandfarmequipment.Inaddition,farmingbynatureisahighlyseasonalendeavorthatexperiences
aprofitduringonlyafewmonthsoftheyear,whileexpensesarespreadoutovertheentiretwelve
months.Thereforeitisnecessarytohaveasignificantamountofcashandcashequivalentassetsatthe
start.Thefarmwillbefinancedwithafarmassistanceloanandasignificantamountofowner'sequity.
Thiswillprovidesufficientcashflowforthefarmuntilitcanstartmakingaprofit.

StartupFunding
StartupExpensestoFund
StartupAssetstoFund
TotalFundingRequired
Assets
NoncashAssetsfromStartup
CashRequirementsfromStartup
AdditionalCashRaised
CashBalanceonStartingDate
TotalAssets

LiabilitiesandCapital
Liabilities
CurrentBorrowing
LongtermLiabilities
AccountsPayable(OutstandingBills)

OtherCurrentLiabilities(interestfree)
TotalLiabilities
Capital
PlannedInvestment
Dr.andMrs.Wilson
Other
AdditionalInvestmentRequirement
TotalPlannedInvestment
LossatStartup(StartupExpenses)
TotalCapital

TotalCapitalandLiabilities
TotalFunding
Startup
Requirements
StartupExpenses
Legal
Repairstofacilities/equipment
Insurance
Rent
Researchanddevelopment
Expensedequipment
Herbicides/pesticides
TotalStartupExpenses
StartupAssets
CashRequired
StartupInventory
OtherCurrentAssets
LongtermAssets
TotalAssets
TotalRequirements

2.2CompanyLocationsandFacilities
TheWilsonshavemadethedownpayment/renton80acresofprimefruitgrowinglandapproximately
3.5northwestofGainesville,Georgia.Thisisoneofthebestareasinthestateforgrowingpeachesand
otherstonefruit.Theacreagebeingsoughthasbeenasuccessfulpeachfarminthepastandgetsplenty
ofsunlight,especiallyearlymorningsunlightthatdriesthedewfromthetrees,therebyreducingthe
incidenceofdiseases.InadditiontheareahasexcellentdrainageandanoptimumsoilpHofaround
6.0.

Thefarmitselfcomeswithacenturyoldhouse,ingoodcondition,barnandstoragearea,including
largerefrigerationfacilities,andexcellentirrigationequipment.Georgiahastwocommercialpeach
growingregions.Thecentralregionisthelargestwithabout70percentofthepeachtreesand83
percentofthestate'sproduction.Thenortheasternregionhasabout23percentofthetreesand
produces17percentofthestate'sharvest.Thelocationofthefarmisidealasitstraddlesbothregions.

Products
TheWilsonFamilyPeachFarmisplanningtogrowsevenvarietiesofpeachesandnectarinesinthe
firstthreeyearsincludingtheRedhaven,Ishtara,TennNatural,Lovell,Bailey,Montclar,Starks
Redleaf,andthefamousElberta.Onceprofitabilityhasbeenestablished,thefarmwillbegintoexpand
intomorerarevarietiessuchasthenewGuardian,whichhasbeenproventobewellsuitedtothelocal
environment.Inaddition,theownerswilldedicateapproximatelytenacrestothegrowingofhybrids
suchaspluots,whichareacombinationofapricotsandplums.Treeswillbespaced16ftapartwithin
rows20ftapart.Averageyieldpertreeisexpectedtoinitiallybe132lbs/tree.Consideringtheprime
areaandsomeoftheproprietarymethodstheWilsonsplantoimplement,yieldsareexpectedtogoup
toasmuchas160lbs/tree.Expectedyieldsperacrewillbearound500bushels.
Withthecurrenttrendtowardhighdensityplantingsofthedwarf,semidwarfandspurtypetrees,
carefulplanningofcultivars(varieties),strains,rootstocks,andspacingwillpaydividends.
Marketingwilltargetthelocalproducestandsthatoftenconcentrateonhybridsandareabletooffer
highermarginsforhighqualityfruits.Inaddition,Mrs.Wilsonhasstartedtoestablishcontractswith
distributorstolocalgrocerystores.Anydamagedfruitthatisstillediblewillbesoldtocanning
factories.

3.1ProductDescription

Peachesaregrownonfruittrees(Prunuspersica)ofthefamilyRosaceae(rosefamily)having
decorativepinkblossomsandajuicy,sweetfruit.Severalofitshorticulturalvarietieswerebroughtby
theSpanishtoNorthAmerica,whereitbecamenaturalizedasfarnorthasPennsylvaniabythelate
17thcentury.Thenumerousvarietiesofpeachesundercultivationaregenerallydistinguishedas
clingstoneorfreestone;thelatterincludethefamousElbertapeach.IntheUnitedStatescommercial
peachproductioncentersinCaliforniaandinthesouthernAtlanticstates.Elsewherethepeachis
cultivatedinsouthernEurope,Africa,Japan,andAustralia.Thetreeispreytofrostandisattackedby
variousfungi,virusdiseases,andinsectpests,againstallofwhichcarefulprecautionsmustbetakenby
growers.Purpleleavedanddoublefloweringformsarecultivatedasornamentals.Thepeachisclosely
relatedtootherspeciesofPrunuse.g.,thecherry,plum,andalmond.*
Thenectarineisasmoothskinnedpeachwithbothfreestoneandclingstonevarieties.Itisaclassical
exampleofbudvariation.Thenectarinetreeoccasionallyproducespeaches,andthepeachtree
nectarines.Inappearance,culture,andcarethenectarineisalmostidenticaltothepeach.*
Theattractivenessofthisfruitisthatfresh,highqualitypeachesandnectarinesaresweettastingand
lowincalories,withonemediumpeachfurnishingonlyabout37calories.Thesefruitareagood
sourceofVitaminCandyellowfleshedvarietiesareagoodsourceofVitaminA.
Peach/nectarineharvestbeginsinMay,peaksinJuly,andendsinAugust.
Oneofthemostcriticalaspectsoffruitfarmingisthepostharvesttreatmentwhichcanpreserveor
destroyitsfreshnessandappeal.Peacheshaveapostharvestlifeof1428daysiftheyarehandled
properlyafterharvest.DuringDr.Wilson'stenureattheUniversityofGeorgiaasanprofessorof
agriculture,heconcentratedmuchofhisresearchonthepostharvesttreatmentofstonefruit.Inorder
toproducethefruitwiththehighestquality,Dr.Wilsonwillbedevotingagreatdealofefforttocreate
thebestenvironmentforthepreservationoftheharvest.Thisincludesmonitoringofthefruit'smaturity
andqualityindices,optimumtemperatureandrelativehumidityofstorage,andratesofrespirationand
ethyleneproduction.
*Source:AmericanFruitProducersAlmanac.

3.1.1Sourcing

SiteandSoilRequirements
Sunlight,andplentyofit,isthekeytomaximizingfruitproduction.Anareaisneededwherethetrees
willbeinthesunmostoralloftheday.Theearlymorningsunisparticularlyimportantbecauseit
driesthedewfromtrees,therebyreducingtheincidenceofdiseases.Iftheplantingsitedoesnotget
plentyofsun,thenyoucan'texpectthebestperformancefromthetrees.Verysteeporbadlyeroded

hillsidesandareashavingpooraircirculationandpoorsoilwaterdrainagemustbeavoided.Although
peachtreeswillgrowwellinawiderangeofsoiltypes,adeepsoilrangingintexturefromasandy
loamtoasandyclayloamispreferred.Peachtreesareextremelysensitivetopoorlydrainedsoils.In
areasofpoordrainage,rootswilldie,resultinginstuntedgrowthandeventualdeathofthetree.
Mostfruitplants,includingpeaches,growbestwhenthesoilpHisnear6.5.SincethenaturalpHof
mostGeorgiasoilisbelowthislevel,itisnecessarytoincorporatelimebeforeplantingtoraisethepH
tothedesiredlevel.
PurchasingTrees
Theoldadage"yougetwhatyoupayfor"isanimportantconsiderationwhenbuyingpeachtrees.
Often,bargainplantsarenothealthyormaynotbeavarietyadaptedtoyourarea.TheWilson'shavea
reliablesourceoftrees,rootstocksandsaplingsthathasbeeninoperationforoverthirtyyears.
TheWilsonsplantopurchasetreesthatmeetthefollowingcriteria:
Ahealthyoneyearoldtree,approximatelythreetofourfeettall.
Alltreesmusthaveagoodrootsystem.
Treesthatarenomorethantwoyearsold.Frequently,oldertreesdonothavesufficientbuds
onthelowerportionofthetrunktodevelopagoodframework.
Notreesthatappearstunted,poorlygrown,diseasedorinsectinjured.
Fertilization
FertilizingpeachesstartswithadjustingthesoilpHto6.5beforeplanting.Additionalfertilizationusing
limeandcalciumnitratewilloccurinMarchandAugust.
Distribution
Farmerswhoareabletoselltothelocalproducestandsusuallyareabletoachieveahighermargin
thanothercompetitorssincethesestandsareusuallytheplacewherebuyersgotogetthehighest
qualityproduceandsearchforrareandnewtypesofcultivars.InanareasuchasGeorgiathathassuch
astrongtraditionoffruitfarming,onlythefarmersofferingthehighestqualityareabletobreakinto
thismarket.Thisrequiresexcellentland,andmostimportantly,knowledgeableandsustained
managementonthepartofthefarmer.BasedonpreviousacquaintanceandDr.Wilson'sreputationin
theagriculturefield,Mrs.Wilsonhasbeenabletoestablishtentativecontractswithtendifferentlocal
producesellersandwithalocaldistributor.Finalapprovalofthesecontractswilldependonthetested
qualityofthefarm'sproduce.

3.2CompetitiveComparison

Thepeachfarmingindustryishighlycompetitive.Eachfarmhashighcapitalcosts,lowmargins,anda
highintensityofcompetition.
Inaddition,theproduceisseenasundifferentiatedanda"commodity"withlittlevalueseparation
betweencompetitors,thismeansthatbuyerpowerisveryhigh.
Thebarrierstoentryandexitaremoderatelyhighinthisindustry.Switchingcostsbetweendifferent
typesofproducearevirtuallynonexistent.However,thecoststoentryandexistthemarketareusually
quitehigh.However,theadvantagesofproducingathighvolumeandreapingthebenefitsof
economiesofscalearequiteattractive.Oncethefarmreachesmaximumproduction,theseeconomies
ofscalewillworktowardtheowner'sadvantage.
Thelargenumberofcompetitorsinthisfieldincludingsubstitutes(whichincludesalmostallother
typesoffruitandsomevegetables)meanthatthepricingforsuchproduceisverycompetitive.The
onlywaytohaveanadvantageinthisindustryiseitherservinganicheoralowcostleadership
principalappliedaggressivelytoallaspectsofthebusiness.

3.3Technology
DuringDr.Wilson'stwentyyearsasaprofessorofAgricultureattheUniversityofGeorgia,hebecame
involvedinsomeofthemostleadingedgetechnologicalandbiologicaldevelopmentsinthestonefruit
growingfield.Hismonogram,QuantitativeMaturityandQualityindicesforFreestoneFruits(Bert,
Wilsonet.al,AgricultureDigest:Spring1990)hasestablishedindustrywidestandardsforboth
farmersandsuppliers.ItisDr.Wilson'sintentiontocontinueintroducingnewproceduresand
processesinhisfarminginordertomaintainacompetitiveadvantageandtobeanimageforotherfruit
farmerstoaspiretoward.Muchofthiswillbeofanempiricalandstatisticalnatureinordertoidentify
andestablishvarioustrendsindiseaseandpestprevention(especiallyintheorganicfield).Asan
exampleofthetechnologytobeused,Dr.Wilsonwillbegintoutilizethenewlaserpufftomeasurethe
ripenessofpeaches.Theinstrument,developedbyUniversityofGeorgiaagriculturalandbiological

engineers,usesapuffofairandalaserbeamtomeasurethefirmnessoffruittohelpfruitgrowersand
packersdeliverariper,moreconsistentproducttomarket.

3.4FutureProducts
AtthebeginningofoperationstheWilsonFamilyPeachFarmplanstogrowestablishedearlyharvest
varietiesofpeachesandnectarinesinordertobefirsttomarketduringtheyearofAmericangrown
fruit.Asthefarmstartsproducingaprofit(estimatedsometimearoundyearfour)thefarmwillstart
producingsomeofthenewervarietiessuchastherecentlydevelopedGuardian,whichisfarbetter
suitedforthelocalenvironmentalconditionsthanothervarieties,eventhewellestablishedElberta
variety.Thefarmwillalsostartproducinghybridforthesmallnichemarketofspecialtyfruitsinorder
toproduceahighermargin.

MarketAnalysisSummary
TheUnitedStatesprovidesaboutonefourth(25%)oftheworld'stotalsupplyoffreshpeaches.
PeachesarethethirdmostpopularfruitgrowninAmerica.Peachesaccountformorethan70percent
ofallstonefruitproducedintheU.S.SouthCarolinaandGeorgiafollowCalifornia's72percentshare
ofpeachproductionatafardistance,averagingabout6and4percentoftheU.S.totaloverthepast
threeyears.In2000,theGeorgiapeachcroptotaled115millionpoundsandbroughtin41.7million.
InadditiontotheElberta,Georgianowproducesmorethan40commercialvarietiesofpeaches.
Domesticandexportpricesforstonefruitin2002dependonseveralfactorsandcannotbepredicted
withcertainty.Lastyear,growerpricesforplumsandnectarinesaveragedlowerthantheprevious
year,whilegrowerpricesforpeachesaveraged3percenthigher,evenwiththelargercrop.Muchofthe
increasesprangfromhigherpricesforprocessingpeaches,andpricesforfreshmarketpeaches
averagedslightlylower.AlthoughsuppliesinGeorgiathissummerareexpectedtobeampletomeet
summerstonefruitdemand,reducedproductionandgoodqualitymaypushupstonefruitpricesfrom
lastyear.
Whatcouldalsohelpboostpricesareexportmarketsasstrongaslastyear's,whenU.S.exportsof
freshpeaches(includingnectarines)andfreshplumswereup15percentand12percentfromtheyear
before.ShipmentstoallthreemajorU.S.marketsforfreshpeacheswereup(Canada,1percent;
Taiwan,29percent;andMexico,42percent),aswereshipmentstothetwomajorexportmarketsfor
U.S.freshplums(Canada,up2percent;andTaiwan,16percent).PlumexportstoHongKongwere
steady.AlthoughJapanopeneditsmarketlastyearforthefirsttimetoU.S.freshnectarines,itdidso
lateintheseason;domesticsupplieswerealreadyscarceandonlyasmallvolumewasshipped.This
summer,theJapanesemarketwillopenforU.S.nectarinesaroundJune15,accordingtoCTFA,when
U.S.suppliesareample.Onthedownside,pooreconomicconditionsinJapanandslowergrowthin
TaiwanthisyearmayweakendemandforU.S.stonefruit.Lastsummer'sretailpricesforfreshmarket
peachesaveraged1percentbelow1999,but8percentabovetheaverageofthelastfiveyears(1995
99).
Thisyear,freezingtemperaturesthroughouttheSoutheastinearlyMarchdamagedsomepeachesin
northernGeorgia.AsofthelastweekofApril,70percentofGeorgia'speachcropappearedtobein
goodcondition;81percentofSouthCarolina'speachcropappearedtobeinfairtogoodcondition.
HarvestingofearlypeachvarietiesstartedtheweekofApril15,earlynectarinevarietiesaweeklater,
andearlyplumvarietiesaroundmidMay.
Source:USDAAgricultureOutlook,June/July2002

4.1MarketSegmentation

WilsonFamilyPeachFarmplanstosellitscroptothreemainbuyers.Inordertokeepitsprofitmargin
high,theWilsonswillconcentrateonsellingthemajorityofitsfruittothelocalproducestandswhich
areabletochargemoreforthehigherqualityfruit.Mostoftherestofthefruitwillbesoldtolocal
fruitpackersanddistributorsthatthenresellthefruittogrocerystores.Finallyanyfruitthatdoesnot
meetthequality/maturitystandardsoftheothertwobuyerswillbesoldtocanneries.

MarketAnalysis
PotentialCustomers
Localproducestands
Localdistributors/grocerystores
Canningcompanies
Total

4.2IndustryAnalysis
Theisawiderangeofindustryparticipantsinthefruitbusiness,fromlargecorporationsandcoopsto
smallfarmsspecializinginfruit,tosmallfarmsthatsellfruitdirectlytothebuyerfromasmallnumber
oftrees.Thismakesforaveryfragmentedindustrywhereitisdifficulttogeneralizestrengths,
weaknesses,competitors,andopportunities.Attemptstoconsolidatetheindustryinthepasthavebeen
ofonlylimitedsuccessbecauseofitscapitalintensivenatureandgovernmentinvolvementin
promotingfamilystylefarming.
Distributionoffruitsgenerallyinvolvessaleoflargevolumestohighlyconsolidatedpackersand
cannerswhohavealargeinfluenceontheindividualfarmer.Becauseanysmallfarmissuchasmall
percentageofthetotalvolumethatdistributorsdealwith,switchingcostsfordistributorsarelowand
thereforesmallfarmersuselocalgroupssuchascoopstoselltheirproduce.Smallfarmsareableto
directsellthroughverticalintegration(owningproducestands)orselltosmalldistributors.

4.2.1IndustryParticipants
Thestonefruitfarmingindustryishighlyfragmentedwithalargenumberofindustryparticipants
ranginginsizefromverylargecorporatefarmswithhundredsofacresandemployingsignificant
migrantworkersduringtheharvestseasontothesmallfamilyfarmsthatareoftensmallerthana
hundredacresandhavelessthantenlaborersperfarm.

4.2.2MainCompetitors
Thereareapproximately1,300differentpeachfarmersofallsizesintheGeorgia/SouthCarolinaarea.
Duetothislargenumberandtheinabilityofanyoneindustryparticipanttoeffectmarketprice,the
WilsonFamilyPeachFarmdoesnothaveanyspecificrivalstocompeteovermarketshareor
importantcustomers.

StrategyandImplementationSummary

ItisthestrategyoftheWilsonFamilyPeachFarmtocapitalizeontheextensiveagricultural
knowledgeofDr.Wilsonandhiswellestablishedreputationinordertoproduceandmarkethigh
qualitypeaches/nectarines.FurthermoretheWilson'splantodevelopandproducenewvarietiesand
hybridfruittointroducetothegeneralpublic.ThiswillbedonethroughDr.andMrs.Wilson'sown
researchandbyallowingUniversityofGeorgiastafftouselimitedacreageforexperimentalpurposes.
Promotionofsaleswillbethroughthevariouslocalfarmer'scoopsandgroupsthatwillactasthe
brokersbetweenthefarmandthedistributors.

5.1CompetitiveEdge

WilsonFamilyPeachFarm'scompetitiveedgeistheagriculturalknowledgeofDr.Wilsonandhis
closecontactsattheUniversityofGeorgiaAgriculturedepartmentthatofferstheopportunityto
introducenewmethodsandprocessesinstonefruitfarmingwellinadvanceofotherlocalfarmers.

5.2MarketingStrategy
Marketingisthemostimportantfactortobeconsideredbeforeventuringintotheorchardbusiness.The
hardfactsarethattobeprofitable,asmall,newoperationneedstoberelatedtoaretailsalesoutlet
eitheronthefarmorinacommunitynearby.Inviewofcurrentretailandwholesaleprices,the
wholesalefruitbusinessistoohazardousforanewcomertojustifytheriskinvolved.Thereisa
"jobber"market,inwhichyouasagrowermayselldirectlytoretailmarketsinnearbycities.While
thisisbydefinition"wholesale,"itprovidesbetterreturnsthantheregularwholesalemarketing
channels.
Theprocessingandjuicemarketsarechronicallytoolowpricedtobeconsidered,unlessaspecialty
marketispursued.Itisatpresentawayofsalvagingoffgradefruit.
Forretailsalesorpickyourowntobeeffectiveandprofitable,thefarmlocationinrelationtoan
adequatepopulationbaseisveryimportant.Competition:Isthereawindowofopportunityinyour
community?Isthereroomforanotherretailorchardoperation?Ofcourse,aggressivemarketingcan
makeroom,butsalesaremucheasierwhencompetitionisreduced.Acommunitywillonlyconsume
somanyapples.Ifmorethanthatamountisproduced,thenthesurplusmustbe"exported."
Threeoftheprimarysuccessfactorsinthistypeofoperationare:location,location,andlocation.
Good,welltraveledroadsclosetoapopulationcenterandanattractive,accessible,convenientsite
areallimportantfactors,too.Ofcourse,thesefactorswillnotbringsuccesswithoutgoodmanagement
andmarketingstrategies.

5.3SalesForecast
Theforecastedyieldsareapproximately500bushelsperacreandtheassumedpriceperbushelis
15.00basedonafiveyearaverage.Theseassumptionsarealsoaconservativeestimatebasedon
yieldsaveragedoveratenyeartimespantoincorporatevariableweatherpatterns.Allprofitsareearned
inthelatewinterearlyfallmonthsastheownersbegintosell90dayfuturescontractsonthe
crop.PeachandnectarineharvestbeginsinMay,peaksinJuly,andendsinAugust.
ThefollowingtableandchartsoutlinesthesalesforecastforWilsonFamilyPeachFarmforthenext
threeyears.

SalesForecast
Sales
Peaches
Nectarines
TotalSales
DirectCostofSales
Peaches

Nectarines
SubtotalDirectCostofSales

ManagementSummary
TheWilsonFamilyPeachFarmwillbeoperatedbyDr.JaredWilsonandhiswife,Susan.Duringthe
harvestseasonandothertimesofneed,theWilsonswillhirecontractlaborersatminimumwageto
assistthem.Theselaborerswillprobablynumbernomorethansixpeopleatanyonetime.All
accountingandbookkeepingwillbeoutsourced.
Dr.JaredWilsonisanativeofGeorgia,havingbeenborninWhiteCreekin1947.Heattendedthe
UniversityofSouthCarolinawhereheobtainedhisBachelorsofScienceinHorticulturein1968.He
subsequentlydidfiveyearsofresearchthroughouttheAmericanSoutheast,concentratingon
upgradingsoiltestingtechniques.In1978hecompletedhisP.h.DinAgricultureattheUniversityof
California,Davis.HebecameassistantprofessorattheUniversityofGeorgiain1980andassumedthe
chairoftheJamesF.OrcottProfessorofAgriculturetherein1985.Throughouthiscareerhehas
continuallyworkedonfruitresearch,withhismostimportantworkbeingincreatingqualityand
maturitystandardsformoststoneandcitrusproduce.Hehasalargenumberofresearchpaperstohis
creditandhasaninternationalreputationasoneofthefinestresearchersinfruitproductionand
methods.HehasconsultedfortheU.S.DepartmentofAgricultureatvarioustimesandisthepresident
oftheAmericanFruitGrowersAssociation.
Mrs.SusanWilsonwasborninSanJose,CaliforniaandgraduatedfromtheUniversityofCalifornia,
Davisin1979withadegreeinnutrition.SheobtainedherMastersdegreeinnutritionattheUniversity
ofGeorgiain1981.ShesubsequentlyworkedatMercyHospitalinAthens,Georgiaadvisingpatients
oneatingdisorders.Mrs.WilsonisamemberoftheAmericanNutritionalEducatorSocietyof
America.

PersonnelPlan
Payroll
Other
TotalPeople
TotalPayroll

FinancialPlan
ThefinancialfuturelookshealthyforWilsonFamilyPeachFarm.Marginsarehigherthanfortypical
fruitfarms,becausetheWilsonsarefocusingongrowinghybridfruitthataremoredifficulttogrow,
butproduceatastierfruit.Inadditiontheywillselltothelocalproducestandswhichareabletocharge
moreforthehigherqualityfruit.

7.1BreakevenAnalysis

Thefarm'sBreakevenAnalysisisbasedonitsrunningcosts,includingpayroll,anditspresentfixed
costs,notincludingtheexpensesassociatedwiththefarm'splannedexpansionin2004.Allunitsarein
bushels.

BreakevenAnalysis

MonthlyRevenueBreakeven
Assumptions:
AveragePercentVariableCost
EstimatedMonthlyFixedCost

7.2ProjectedProfitandLoss
TheProjectedProfitandLossfortheWilsonFamilyPeachFarmhasanaveragegrossmarginofabout
3540%.ThexpendituresarebasedonthefollowingdataprovidedbytheGeorgiaStateAgriculture
Division.
AverageExpendituresonGeorgiaFarms,PercentofTotalExpensesbyCategory
Capital

8.5%

Energy

4.5%

Feed&Hay

23.0%

Fertilzer

5.0%

HiredLabor

9.0%

Interest

7.0%

Landlords

2.0%

Livestock

6.5%

Marketing

6.0%

OtherMisc

14.5%

Pesticides

4.5%

Repairs

4.0%

Seed

3.0%

Tax&Fees

2.5%

ProFormaProfitandLoss
Sales
DirectCostofSales
OtherProductionExpenses
TotalCostofSales
GrossMargin
GrossMargin%

Expenses
Payroll
SalesandMarketingandOtherExpenses
Depreciation
LeasedEquipment
Utilities
Insurance
Rent
PayrollTaxes
Other
TotalOperatingExpenses
ProfitBeforeInterestandTaxes
EBITDA
InterestExpense
TaxesIncurred
NetProfit
NetProfit/Sales

7.3ProjectedCashFlow
ThefollowingistheprojectedCashFlowforWilsonFamilyPeachFarm.

ProFormaCashFlow
CashReceived

CashfromOperations
CashSales
CashfromReceivables
SubtotalCashfromOperations
AdditionalCashReceived
SalesTax,VAT,HST/GSTReceived
NewCurrentBorrowing
NewOtherLiabilities(interestfree)
NewLongtermLiabilities
SalesofOtherCurrentAssets
SalesofLongtermAssets
NewInvestmentReceived
SubtotalCashReceived
Expenditures
ExpendituresfromOperations
CashSpending
BillPayments
SubtotalSpentonOperations
AdditionalCashSpent
SalesTax,VAT,HST/GSTPaidOut
PrincipalRepaymentofCurrentBorrowing
OtherLiabilitiesPrincipalRepayment
LongtermLiabilitiesPrincipalRepayment
PurchaseOtherCurrentAssets
PurchaseLongtermAssets
Dividends
SubtotalCashSpent
NetCashFlow
CashBalance

7.4ProjectedBalanceSheet
ThefollowingtableshowstheProjectedBalanceSheetforWilsonFamilyPeachFarm.

ProFormaBalanceSheet
Assets
CurrentAssets
Cash
AccountsReceivable
Inventory
OtherCurrentAssets

TotalCurrentAssets
LongtermAssets
LongtermAssets
AccumulatedDepreciation
TotalLongtermAssets
TotalAssets
LiabilitiesandCapital
CurrentLiabilities
AccountsPayable
CurrentBorrowing
OtherCurrentLiabilities
SubtotalCurrentLiabilities
LongtermLiabilities
TotalLiabilities
PaidinCapital
RetainedEarnings
Earnings
TotalCapital
TotalLiabilitiesandCapital
NetWorth

7.5BusinessRatios
Businessratiosfortheyearsofthisplanareshownbelow.IndustryprofileratiosbasedontheStandard
IndustrialClassification(SIC)code0175,[OtherNoncitrusFruitFarming(exceptapples,grapes,
berries,andfruit(s)andtreenut(s)combinations)],areshownforcomparison.

RatioAnalysis
SalesGrowth
PercentofTotalAssets
AccountsReceivable
Inventory
OtherCurrentAssets
TotalCurrentAssets
LongtermAssets
TotalAssets
CurrentLiabilities
LongtermLiabilities
TotalLiabilities
NetWorth

PercentofSales
Sales
GrossMargin
Selling,General&AdministrativeExpenses
AdvertisingExpenses
ProfitBeforeInterestandTaxes
MainRatios
Current
Quick
TotalDebttoTotalAssets
PretaxReturnonNetWorth
PretaxReturnonAssets
AdditionalRatios
NetProfitMargin
ReturnonEquity
ActivityRatios
AccountsReceivableTurnover
CollectionDays
InventoryTurnover
AccountsPayableTurnover
PaymentDays
TotalAssetTurnover
DebtRatios
DebttoNetWorth
CurrentLiab.toLiab.
LiquidityRatios
NetWorkingCapital
InterestCoverage
AdditionalRatios
AssetstoSales
CurrentDebt/TotalAssets
AcidTest
Sales/NetWorth
DividendPayout

Appendix
SalesForecast

Sales
Peaches
Nectarines
TotalSales

0%
0%

DirectCostofSales
Peaches
Nectarines
SubtotalDirectCostofSales

PersonnelPlan
Payroll
Other
TotalPeople

0%
0%

TotalPayroll

GeneralAssumptions
PlanMonth
CurrentInterestRate
LongtermInterestRate
TaxRate
Other
ProFormaProfitandLoss
Sales
DirectCostofSales
OtherProductionExpenses
TotalCostofSales
GrossMargin
GrossMargin%

Expenses
Payroll
SalesandMarketingandOtherExpenses
Depreciation
LeasedEquipment
Utilities
Insurance
Rent
PayrollTaxes
Other

15%

TotalOperatingExpenses
ProfitBeforeInterestandTaxes
EBITDA
InterestExpense
TaxesIncurred
NetProfit
NetProfit/Sales

ProFormaCashFlow
CashReceived
CashfromOperations
CashSales
CashfromReceivables
SubtotalCashfromOperations
AdditionalCashReceived

6,750
0
6,750

SalesTax,VAT,HST/GSTReceived
NewCurrentBorrowing
NewOtherLiabilities(interestfree)
NewLongtermLiabilities
SalesofOtherCurrentAssets
SalesofLongtermAssets
NewInvestmentReceived
SubtotalCashReceived

0.00%

0
0
0
0
0
0
0
6,750

Expenditures
ExpendituresfromOperations
CashSpending
BillPayments
SubtotalSpentonOperations

0
1,411
1,411

AdditionalCashSpent
SalesTax,VAT,HST/GSTPaidOut
PrincipalRepaymentofCurrentBorrowing
OtherLiabilitiesPrincipalRepayment
LongtermLiabilitiesPrincipalRepayment
PurchaseOtherCurrentAssets
PurchaseLongtermAssets
Dividends
SubtotalCashSpent

0
1,000
0
1,250
0
2,000
0
5,661

NetCashFlow
CashBalance

1,089
128,809

ProFormaBalanceSheet
Month1
Assets

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10 Month11

Month12

Starting
Balances

CurrentAssets
Cash

127,720

128,809 93,179

94,195

AccountsReceivable
Inventory

0
0

38,250
14,850

117,158 133,875 109,792

24,750 28,050 15,510

OtherCurrentAssets
TotalCurrentAssets

0
127,720

0
0
0
0
0
181,909 206,854 236,103 292,458 268,558

0
0
0
0
0
0
0
261,520 243,128 231,630 220,945 210,933 200,745 190,571

LongtermAssets
AccumulatedDepreciation

140,280
0

142,280 144,280 146,280 148,280 150,280

200
400
600
800
1,000

152,280 154,280 156,280 158,280 160,280 162,280 164,280

1,200
1,400
1,600
2,000
2,400
2,800
3,200

TotalLongtermAssets
TotalAssets

140,280
268,000

142,080 143,880 145,680 147,480 149,280

323,989 350,734 381,783 439,938 417,838

151,080 152,880 154,680 156,280 157,880 159,480 161,080

412,600 396,008 386,310 377,225 368,813 360,225 351,651

92,225
21,450

130,533 143,256

194,192 215,098 223,320 212,635 202,623 192,435 182,261

59,018
8,310

19,720
8,310

0
8,310

0
8,310

0
8,310

0
8,310

0
8,310

LongtermAssets

LiabilitiesandCapital

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10 Month11

Month12

CurrentLiabilities
AccountsPayable
CurrentBorrowing

0
25,000

40,930
24,000

42,768
23,000

44,452
22,000

50,551
21,000

16,210
20,000

10,967
19,000

5,068
18,000

5,243
17,000

5,564
16,000

5,740
15,000

5,727
14,000

5,715
13,000

OtherCurrentLiabilities
SubtotalCurrentLiabilities

25,000
50,000

25,000
89,930

25,000
90,768

25,000
91,452

25,000
96,551

25,000
61,210

25,000
54,967

25,000
48,068

25,000
47,243

25,000
46,564

25,000
45,740

25,000
44,727

25,000
43,715

LongtermLiabilities

100,000

98,750

97,500

96,250

95,000

93,750

92,500

91,250

90,000

88,750

87,500

86,250

85,000

TotalLiabilities

150,000

188,680 188,268 187,702 191,551 154,960

147,467 139,318 137,243 135,314 133,240 130,977 128,715

PaidinCapital
RetainedEarnings

175,000
(57,000)

175,000 175,000 175,000 195,000 195,000

(57,000) (57,000) (57,000) (57,000) (57,000)

195,000 195,000 195,000 195,000 195,000 195,000 195,000

(57,000) (57,000) (57,000) (57,000) (57,000) (57,000) (57,000)

Earnings
TotalCapital

0
118,000

17,309 44,466 76,081 110,387 124,879

135,309 162,466 194,081 248,387 262,879

127,133 118,691 111,067 103,911 97,573 91,248 84,936

265,133 256,691 249,067 241,911 235,573 229,248 222,936

TotalLiabilitiesandCapital

268,000

323,989 350,734 381,783 439,938 417,838

412,600 396,008 386,310 377,225 368,813 360,225 351,651

NetWorth

118,000

135,309 162,466 194,081 248,387 262,879

265,133 256,691 249,067 241,911 235,573 229,248 222,936