Annual Farm Operating Plans

• operating plan
• business plan
• planning

What is an annual operating plan?

It is a written plan for the coming year that describes what you will produce, how you will sell it, what it will cost and how you will pay for it. It ties together your budgets, cash flow and any planned changes.

FSA and other lenders usually ask for a farm operating plan with a loan application. Check the current FSA loan guide for what it expects.

Think of your plan as a conversation starter with your lender, not a contract. It shows how you think and what you expect, and it gives the lender a way to ask good questions. When conditions change, share the update. Lenders usually prefer a farmer who adjusts openly over one who stays silent.

What sections should it have?

A short description of the operation and goals, production plan by enterprise, marketing plan, labor and equipment plan, financial projections and a section on risks. Keep it plain and short.

Three to six pages is enough for most farms, with budgets attached.

• Goals and operation summary
• Production, marketing and labor
• Financial projections and risks

How do you set useful goals?

Choose a few goals you can measure, such as a target cost per unit, a debt payment you want to retire or a sales channel to add. Keep family and personal goals in view because they shape what the farm needs to earn.

Goals without numbers are hard to review at the end of the year.

Include a short section on people: who does what, who makes decisions, what skills you have and which you need to add. For family operations, note how management and labor will be shared. Lenders know that people, more than spreadsheets, carry a farm through hard years.

How do you handle marketing?

Describe who will buy, at what price, when and how. For commodity crops, describe your marketing approach, such as storage and timing. For direct sales, name your channels and expected volumes.

Lenders look for evidence that sales are realistic, such as contracts or past sales.

Write the plan in plain language that a neighbor or a new employee could follow. Avoid jargon and unexplained abbreviations, and spell out assumptions. A plan that is easy to read is easier to use, and easier for a lender to trust.

What financial pieces should be attached?

A balance sheet, last year's income statement, enterprise budgets, a whole-farm budget and a monthly cash flow. If you are asking for credit, show the amount, the use and the repayment source.

Include the downside case. A plan that survives a bad year is stronger.

Store the plan and its supporting records where you can find them quickly, and keep a copy of what you gave each lender. When you apply again, you can update rather than rebuild, and you will have a record of what you said you would do, which makes year-end review easier.

How do you use the plan during the year?

Review it at least quarterly. Compare results to the plan, note what changed and update the next months. Share major changes with your lender before they become problems.

At year end, write a short summary of what worked and what did not. That becomes the start of next year's plan.

Include a short contingency section: what you will do if prices drop, if a key person is unavailable or if weather damages a crop. Even a few lines show that you have thought about trouble and have steps ready.

What mistakes should you avoid?

Writing a plan only for the loan officer, making it too long, leaving out risks and never looking at it again. Another is copying last year's plan without adjusting prices and costs.

Ask an outside reader to review it. A neighbor or extension advisor will spot gaps you cannot see.

A plan can also include a short list of actions with dates and owners, such as renew the operating line, test soils, service the planter or finish the marketing contracts. Assigning each task to a person and a month turns intentions into work. Review the list at each quarterly check, and move what slipped rather than hiding it.

Last reviewed: November 12, 2026. Written by the Farm Money & Grants Editorial Team. Educational only, not tax, legal or financial advice. See our editorial policy.